Deserving Poor and the Desirability of Minimum Wage Rules

Tomer Blumkin and Leif Danziger ()

No 4721, CESifo Working Paper Series from CESifo

Abstract: In this paper we provide a novel justification for the use of minimum wage rules to supplement the optimal tax-and-transfer system. We demonstrate that if labor supply decisions are concentrated along the intensive margin and employment is efficiently rationed, a minimum wage rule can be socially beneficial by serving as a tagging device that targets benefits to the deserving poor, defined as low-skilled workers exhibiting a weak taste for leisure.

Keywords: redistribution; minimum wage; efficient rationing (search for similar items in EconPapers)
JEL-codes: D60 H20 H50 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4721

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