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Preprints, Working Papers, ... Year : 2009

Optimal Taxation and Monopsonistic Labor Market: Does Monopsony justify the Minimum Wage?

Abstract

Does monopsony on the labor market in itself justify the implementation of a minimum wage when it would not be used in a competitive economy? This issue is studied in a model of optimal taxation. We adopt a definition most favorable to the minimum wage: the minimum wage is useful whenever it can replace a non negligible part of the tax schedule. The minimum wage is useful to correct the inefficiencies associated with the monopsony when there is a single skill. But the minimum wage is not useful any more when there are a continuum of skills.
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Dates and versions

hal-00396252 , version 1 (17-06-2009)

Identifiers

  • HAL Id : hal-00396252 , version 1

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Pierre Cahuc, Guy Laroque. Optimal Taxation and Monopsonistic Labor Market: Does Monopsony justify the Minimum Wage?. 2009. ⟨hal-00396252⟩
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