Minimum Wage with Optimal Income Taxation
20 Pages Posted: 17 Aug 2004
Date Written: February 2004
Minimum wage legislation is a standard policy tool in most countries. However, the overall merits of minimum wage are controversial due to its potential adverse effects on unemployment. In this paper we construct a simple model in which minimum wage plays an important re-distributive role, alongside income taxation, without generating adverse effects on unemployment.
JEL Classification: H2, D6
Suggested Citation: Suggested Citation