Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144421
Authors: 
De Crombrugghe, Alain
De Walque, Gregory
Year of Publication: 
2011
Series/Report no.: 
Working Paper Research 209
Abstract: 
Most transition countries used tax-supported wage norms in the early 1990's, as a part of their market liberalization programs. This paper analyses how a firm-level tax (or subsidy) on deviations from a pre-set wage norm may promote employment by rotating the labor demand curve perceived by the workers' union around the value of the norm. We derive the conditions such that it yields a positive employment effect. We test the effect of the norm on the wages on a sample of Polish firms in 1990 and 1991. The data support the role of the wage norm on the position of the perceived labor demand and the role of the tax rate on its slope.
Subjects: 
transition economies
labor market
unions
excess wage tax
employment
JEL: 
H23
J23
J5
P31
Document Type: 
Working Paper

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