On the Optimality of a Minimum Wage: New Insights from Optimal Tax Theory"

Mathis Hungerbühler and Etienne Lehmann ()
Additional contact information
Mathis Hungerbühler: Crest

No 2007-17, Working Papers from Center for Research in Economics and Statistics

Abstract: We build a theoretical model to study whether a minimum wage can be welfare-improving ifit is implemented in conjunction with an optimized nonlinear income tax. We consider thisissue in a framework where search frictions on the labor market generate unemployment.Workers differ in productivity. The government does not observe workers' productivity butonly their wages. Hence, the redistributive policy solves an adverse selection problem. Weshow that a minimum wage is optimal if the bargaining power of the workers is relativelylow. However, if the government controls the bargaining power, then it is preferable to set asufficiently high bargaining power.

Pages: 31
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://crest.science/RePEc/wpstorage/2007-17.pdf Crest working paper version (application/pdf)

Related works:
Journal Article: On the optimality of a minimum wage: New insights from optimal tax theory (2009)
Working Paper: On the Optimality of a Minimum Wage: New Insights from Optimal Tax Theory (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crs:wpaper:2007-17

Access Statistics for this paper

More papers in Working Papers from Center for Research in Economics and Statistics Contact information at EDIRC.
Bibliographic data for series maintained by Secretariat General () and Murielle Jules Maintainer-Email : murielle.jules@ensae.Fr.