Deserving Poor and the Desirability of Minimum Wage Rules

25 Pages Posted: 17 Apr 2014

See all articles by Tomer Blumkin

Tomer Blumkin

Tel Aviv University - Eitan Berglas School of Economics; Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Leif Danziger

Ben-Gurion University of the Negev - Department of Economics; IZA Institute of Labor Economics

Date Written: March 16, 2014

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

JEL Classification: D600, H200, H500

Suggested Citation

Blumkin, Tomer and Danziger, Leif, Deserving Poor and the Desirability of Minimum Wage Rules (March 16, 2014). CESifo Working Paper Series No. 4721, Available at SSRN: https://ssrn.com/abstract=2425588

Tomer Blumkin (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+972 8 647 2268 (Phone)
+972 8 647 2941 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Leif Danziger

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
8-6472295 (Phone)
8-6472941 (Fax)

HOME PAGE: http://www.econ.bgu.ac.il/facultym/danziger/main.htm

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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