A case for maximum wage

Tomer Blumkin, Efraim Sadka, Yotam Shem-Tov

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper we demonstrate that supplementing the optimal non-linear income tax system with a binding maximum wage rule attains a Pareto improvement, by serving to mitigate the mimicking incentives of the high-skill individuals without entailing distortions.

Original languageEnglish
Pages (from-to)374-378
Number of pages5
JournalEconomics Letters
Volume120
Issue number3
DOIs
StatePublished - Sep 2013

Keywords

  • Maximum wage
  • Optimal income tax
  • Redistribution

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