Underreporting of Earnings and the Minimum Wage Spike
AbstractThis 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.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5942.
Length: 19 pages
Date of creation: Aug 2011
Date of revision:
Publication status: published in: IZA Journal of European Labor Studies, 2013, 2, Article 2
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Other versions of this item:
- Mirco Tonin, 2013. "Underreporting of earnings and the minimum wage spike," IZA Journal of European Labor Studies, Springer, vol. 2(1), pages 1-18, December.
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-05 (All new papers)
- NEP-IUE-2011-09-05 (Informal & Underground Economics)
- NEP-LAB-2011-09-05 (Labour Economics)
- NEP-LMA-2011-09-05 (Labor Markets - Supply, Demand, & Wages)
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