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| Author: | Chéron, A. Hairault, J-O. Langot, F. |
| Title: | A quantitative evaluation of payroll tax subsidies for low-wage workers: an equilibrium search approach |
| Journal: | Journal of Public Economics
2008 : APR, VOL. 92:3-4, p. 817-843 |
| Index terms: | labour costs employment productivity low incomes pay workers France models |
| Language: | eng |
| Abstract: | This paper evaluates the effect of a policy on employment and also on output and welfare. An equilibrium search model is built including wage posting and specific human capital investment, where unemployment and the distribution of both wages and productivity are endogenous. The model is estimated using French data. Numerical simulations show that the prevailing minimum wage allows a high production level to be reached by increasing training investment, although the optimal minimum wage is lower. It is shown that payroll tax subsidies enhance welfare more than a reduction in the minimum wage when they are spread over a large range of wages to avoid specialization in low productivity jobs. |
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