Taxes, Redistribution, and the Minimum Wage: A Theoretical Analysis
Quarterly Journal of Economics
1987
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.
- DOI
- 10.2307/1884214
- Volume
- 102 (3)
- Pages
- 477
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