The Redistributive Role of Minimum Wage Legislation and Unemployment Insurance
AbstractThe use of unemployment insurance and minimum wages as instruments for redistributing income are analyzed. The government is assumed to be able to implement an optimal income tax in an economy consisting of two ability-types of persons. The effect of introducing a minimum wage which induces involuntary unemployment combined with unemployment insurance is considered. Social welfare can be improved despite the possible revenue costs to the government if the policy causes a self-selection constraint to be weakened by enough. Sufficiency conditions are derived for this to be the case.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 805.
Length: 26 pages
Date of creation: Mar 1991
Date of revision:
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- Christian Arnsperger & David Croix, 1996.
"Envy-minimizing unemployment benefits,"
Review of Economic Design,
Springer, vol. 2(1), pages 119-146, December.
- Arnsperger, Christian & de la Croix, David, 1994. "Envy-Minimizing Unemployment Benefits," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1995001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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