Minimum Wage or Negative Income Tax: Why Skilled Workers May Favor Wage Rigidities
This article studies the political choice over the extent and the means of income redistribution between high and low skilled workers. Redistributive tools encompass fiscal transfers with negative income tax and minimum wage. Using fiscal instruments only is assumed optimal. We show that high skilled workers may favor a second-best minimum wage requirement. This is because minimum wage increases unemployment, hence the marginal cost of redistribution is higher which gives a pretext for high skilled workers to moderate low skilled workers claim for income redistribution.
|Date of creation:||Apr 2005|
|Date of revision:|
|Publication status:||published as 'Minimum wage or negative income tax: why skilled workers may favor wage rigidities' in: Spanish Economic Review, 2008, 10 (1), 63-81|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steve Nickell & Jan van Ours, 2000.
"The Netherlands and the United Kingdom: a European unemployment miracle?,"
CEPR;CES;MSH, vol. 15(30), pages 135-180, 04.
- van Ours, J.C. & Nickell, S.J., 2000. "The Netherlands and the United Kingdom : A European unemployment miracle?," Other publications TiSEM 8dc4101d-6e72-44dd-9ab0-4, Tilburg University, School of Economics and Management.
- Nickell, S.J. & van Ours, J.C., 1999. "The Netherlands and the United Kingdom : A European Unemployment Miracle?," Discussion Paper 1999-119, Tilburg University, Center for Economic Research.
- Saint-Paul, G., 1995.
"Labour Market Institutions and the Cohesion of the Middle Class,"
DELTA Working Papers
95-30, DELTA (Ecole normale supérieure).
- Gilles Saint-Paul, 1996. "Labor market institutions and the cohesion of the middle class," International Tax and Public Finance, Springer, vol. 3(3), pages 385-395, July.
- Saint-Paul, Gilles, 1995. "Labour Market Institutions and the Cohesion of the Middle Class," CEPR Discussion Papers 1298, C.E.P.R. Discussion Papers.
- Persson, T. & Tabellini, G., 1997.
"Political Economics and Macroeconomic Policy,"
630, Stockholm - International Economic Studies.
- Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers.
- Torsten Persson & Guido Tabellini, 1997. "Political Economics and Macroeconomic Policy," NBER Working Papers 6329, National Bureau of Economic Research, Inc.
- Torsten Persson & Guido Tabellini, . "Political Economics and Macroeconomic Policy," Working Papers 121, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Persson, Torsten & Tabellini , Guido, 1997. "Political Economics and Macroeconomic Policy," Seminar Papers 630, Stockholm University, Institute for International Economic Studies.
- Epstein, Gil S & Nitzan, Shmuel, 1999.
"The Endogenous Determination of Minimum Wage,"
CEPR Discussion Papers
2319, C.E.P.R. Discussion Papers.
- Kau, James B & Rubin, Paul H, 1978. "Voting on Minimum Wages: A Time-Series Analysis," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 337-42, April.
- Piketty, Thomas, 1999. "Can fiscal redistribution undo skill-biased technical change?: Evidence from the French experience," European Economic Review, Elsevier, vol. 43(4-6), pages 839-851, April.
- Russell S. Sobel, 1999. "Theory and Evidence on the Political Economy of the Minimum Wage," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 761-785, August.
- Herwig Immervoll, 2004. "Average and Marginal Effective Tax Rates Facing Workers in the EU: A Micro-Level Analysis of Levels, Distributions and Driving Factors," OECD Social, Employment and Migration Working Papers 19, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp1570. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.