Deserving poor and the desirability of a minimum wage

Tomer Blumkin; Leif Danziger

This paper provides a novel justification for using a minimum wage to supplement an optimal tax-and-transfer system. We demonstrate that if labor supply decisions are concentrated along the intensive margin and employment is efficiently rationed, a minimum wage can be socially beneficial by serving as a screening device that targets benefits to the deserving poor. We also show that with a minimum wage in place, a negative marginal tax rate may not be optimal.

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Year of publication:	2014
Authors:	Blumḳin, Tomer ; Danziger, Leif
Publisher:	Bonn : IZA
Subject:	deserving poor \| minimum wage \| redistribution \| efficient rationing \| negative marginal tax rate \| Mindestlohn \| Minimum wage \| Theorie \| Theory \| Umverteilung \| Redistribution \| Armut \| Poverty \| Grenzsteuersatz \| Marginal tax rate \| Optimale Besteuerung \| Optimal taxation