Arbeitspapier
On the optimality of a minimum wage: new insights from optimal tax theory
We build a theoretical model to study whether a minimum wage can be welfare-improving if it is implemented in conjunction with an optimized nonlinear income tax. We consider this issue in a framework where search frictions on the labor market generate unemployment. Workers differ in productivity. The government does not observe workers' productivity but only their wages. Hence, the redistributive policy solves an adverse selection problem. We show that a minimum wage is optimal if the bargaining power of the workers is relatively low. However, if the government controls the bargaining power, then it is preferable to set a sufficiently high bargaining power.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 2957
- Classification
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Wirtschaft
- Subject
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Optimale Besteuerung
Mindestlohn
Einkommensteuer
Lohnverhandlungen
Friktionelle Arbeitslosigkeit
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Hungerbühler, Mathias
Lehmann, Etienne
- Event
-
Veröffentlichung
- (who)
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Institute for the Study of Labor (IZA)
- (where)
-
Bonn
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hungerbühler, Mathias
- Lehmann, Etienne
- Institute for the Study of Labor (IZA)
Time of origin
- 2007
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