We analyze the redistributive (dis)advantages of a minimum wage over income taxation in competitive labor markets. A minimum wage causes more unemployment, but also leads to more skill formation as unemployment is concentrated on low-skilled workers. A simple condition based on three sufficient...

This paper analyzes long run outcomes resulting from adopting a binding minimum wage in a neoclassical model with perfectly competitive labour markets and capital accumulation. The model distinguishes between workers of heterogeneous ability and capitalists who do all the saving, and it entails...

To many economists the public's support for the minimum wage (MW) institution is puzzling, since the MW is considered a "blunt instrument" for redistribution. To delve deeper in this issue we build models in which workers are heterogeneous in ability. In the first model, the government does not...

We explain the public's support for the minimum wage (MW) institution despite economists' warnings that the MW is a "blunt instrument" for redistribution. To do so we build a model in which workers are heterogeneous in ability, and the government engages in redistribution through the public...

To many economists the public's support for the minimum wage (MW) institution is puzzling, since the MW is considered a “blunt instrument” for redistribution. To delve deeper in this issue we build models in which workers are heterogeneous in ability. In the first model, the government does...