Taxes, Redistribution, and the Minimum Wage: A Theoretical Analysis

Taxes, Redistribution, and the Minimum Wage: A Theoretical Analysis

This paper considers a simple general equilibrium model that contains two types of workers with differing levels of ability and a social-welfare-maximizing government. The paper shows that social welfare can sometimes be increased by supplementing an optimal linear income tax with a minimum wage, bu...

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Veröffentlicht in:The Quarterly journal of economics 1987-08, Vol.102 (3), p.477-489
1. Verfasser: Allen, Stephen P.
Format: Artikel
Sprache:eng
Schlagworte:
Economic theory
Income redistribution
Income taxes
Lump sum payments
Mathematical models
Minimum wage
Optimal taxation
Price ceilings
Public economics
Social welfare
Taxation systems
Underemployment
Wages
Welfare economics
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Zusammenfassung:This paper considers a simple general equilibrium model that contains two types of workers with differing levels of ability and a social-welfare-maximizing government. The paper shows that social welfare can sometimes be increased by supplementing an optimal linear income tax with a minimum wage, but that social welfare can never be increased by supplementing an optimal nonlinear income tax with a minimum wage.
ISSN:0033-5533
1531-4650
DOI:10.2307/1884214