In this paper we prove that a graduated minimum wage rate can provide a Pareto improvement of an optimal allocation with nonlinear taxation. The reason is that a graduated minimum wage rate makes it harder for the more productive workers to mimic the income of the less productive workers. We also show that in a utilitarian social welfare optimum, the graduated minimum wage rate increases the co...

Is There a Social Security Tax Wedge? A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bismarckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to offset each other. The distortion may...

Public-works programs in developing countries have recently attracted a lot of attention as anti-poverty initiatives. This paper analyzes the labor-market impacts of the largest public-works program in the world, the Indian NREGS, using information about its rollout in a regression-discontinuity design. The results suggest that the overall employment and casual wage impacts are small, although ...

A general consensus has emerged that while the UK National Minimum Wage (NMW) raised the pay of low wage workers it did little to harm their employment prospects. This is in contrast to the US and other countries where a debate over minimum wage effects still rages on. We re-examine the evidence on the introduction of the NMW and look at subsequent increases through the recession focusing on se...

This paper examines the potential causes of the “ripple effect” of minimum wages. This wage spillover is thought to result from labor demand substitution: where the rising minimum increases the demand for more-skilled workers who become relatively inexpensive. However, the rising minimum also affects the relative wages across hedonically distinct occupations because it lowers compensating wage ...

Incentives for Teacher Relocation: Evidence from the Gambian Hardship Allowance We evaluate the impact of the Gambian hardship allowance, which provides a salary premium of 30-40% to primary school teachers in remote locations, on the distribution and characteristics of teachers across schools. A geographic discontinuity in the policy’s implementation and the presence of common pre-treatment tr...

This study analyses employers‘ support for the introduction of industry-specifi c minimum wages as a cost-raising strategy in order to deter market entry. Using a unique data set consisting of 800 fi rms in the German service sector, we fi nd some evidence that high-productivity employers support minimum wages. We further show that minimum wage support is higher in industries and regions with l...

This paper estimates the employment eff ects of industry-specifi c, collectively-bargained minimum wages in Germany for two occupations associated with the construction sector. I propose a truly exogenous control group in contrast to the control group design used in the literature. Further, a diff erence-in-diff erences-in-diff erences estimator is presented as a robustness test for occupation-...

This paper exploits the differential timing of the introduction of a labor market program across areas as well as agerelated eligibility rules to identify the treatment effect of a targeted active labor market program. We are especially concerned about substitution and equilibrium wage effects. The program studied is the “New Deal for the Young Unemployed” in the UK and uses an administrative p...

Endogenous Monopsony and the Perverse Effect of the Minimum Wage in Small Firms The minimum wage rate has been introduced in many countries as a means of alleviating the poverty of the working poor. This paper shows, however, that an imperfectly enforced minimum wage rate causes small firms to face an upward-sloping labor supply schedule. Since this turns these firms into endogenous monopsonist...