Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93398
Authors: 
Gerritsen, Aart
Jacobs, Bas
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4588
Abstract: 
We analyze the redistributive (dis)advantages of a minimum wage over income taxation in competitive labor markets. A minimum wage causes more unemployment, but also leads to more skill formation as unemployment is concentrated on low-skilled workers. A simple condition based on three sufficient statistics shows that a minimum wage is desirable if the social welfare gains of more skill formation outweigh the social welfare losses of increased unemployment. Using a highly conservative calibration, a minimum wage decrease is shown to be part of a Pareto-improving policy reform for all countries under consideration, except possibly the United States.
Subjects: 
minimum wage
optimal redistribution
unemployment
education
JEL: 
D60
H21
H24
J21
J24
J38
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.