Underreporting of earnings and the minimum wage spike

Arbeitspapier

This paper documents a positive correlation within European labour markets between the proportion of full-time employees with earnings on the minimum wage and the extent of underreporting of earnings in the economy. Using a simple model of a competitive labour market, I show how this correlation can emerge as a result of the common dependence of both quantities on the strength of enforcement of fiscal regulation. This suggests that a high spike in the wage distribution at the minimum wage level is, in some contexts, an issue of fiscal enforcement, more than a labour market issue.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5942

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: Public Policy ; Tax Evasion and Avoidance
• Subject: minimum wage ; spike ; underreporting ; lighthouse effect ; Mindestlohn ; Einkommen ; Berichtswesen ; Informeller Sektor ; Normbefolgung ; Europa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tonin, Mirco
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/55132
• URN: urn:nbn:de:101:1-201109286350
• Last update: 10.03.2025, 11:42 AM CET