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Layoff Taxes and Minimum Wage. Two Complementary Public Policies

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  • Thérèse REBIÈRE
  • Frédéric GAVREL
  • Isabelle LEBON

Abstract

In a matching model in which the job destruction rate and the output are endogenous, we show that the presence of a binding minimum wage prompts firms to choose too risky jobs. Introducing layoff taxes therefore reduces unemployment and improves market efficiency.
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  • Thérèse REBIÈRE & Frédéric GAVREL & Isabelle LEBON, 2009. "Layoff Taxes and Minimum Wage. Two Complementary Public Policies," EcoMod2009 21500077, EcoMod.
    • Handle: RePEc:ekd:000215:21500077
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    References listed on IDEAS

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    Cited by:

    1. Wang, Cheng & Williamson, Stephen D., 2002. "Moral hazard, optimal unemployment insurance, and experience rating," Journal of Monetary Economics, Elsevier, vol. 49(7), pages 1337-1371, October.

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