Minimum wage or negative income tax

Minimum wage or negative income tax

why skilled workers may favor wage rigidities

by Maya Bacache-Beauvallet

Book 1570 of no.

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"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"--Forschungsinstitut zur Zukunft der Arbeit web site.

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