Minimum wage or negative income tax: why skilled workers may favor wage rigidities

• Autores: Maya Bacache-Beauvallet, Etienne Lehmann
• Localización: Spanish economic review, ISSN 1435-5469, Vol. 10, Nº 1, 2008, págs. 63-81
• Idioma: inglés
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• Resumen

  • In this article, we analyze the political choice of the extent and means of income redistribution between high and low-skilled workers. Redistributive tools encompass both fiscal transfers (a negative income tax) and a minimum wage requirement. We assume the use of fiscal instruments alone to be the first-best means of redistribution. We show that high-skilled workers may favor a second-best, minimum wage requirement because it increases unemployment, hence raising the marginal cost of redistribution, and creates a justification for them to moderate low-skilled workers’ claim for redistribution.