We study the impact of tax policy on wage negotiations, workers' effort, employment, output and welfare when workers' effort is only imperfectly observable. We show that the different wage-setting motives - rent sharing and effort incentives - reinforce the effects of partial tax policy measures...

We study the subsidization of extra jobs in a general equilibrium framework. While the previous literature focuses on symmetric marginal employment subsidies where firms are rewarded when they increase employment but punished when they reduce their workforce, we consider an asymmetric scheme...

This paper shows that outsourcing of parts of the workforce in unionized firms leads to wage moderation and as long as the share of the outsourced workforce is not too large, this wage-moderation effect on domestic employment outweighs the direct substitution effect so that domestic employment...

Using data from the 2006 wave of the German Socio-Economic Panel (GSOEP), this paper analyzes how a minimum wage affects employment, wage inequality, public expenditures, and aggregate income in the low-wage sector. It is shown that a statutory minimum wage of EUR 7.50 per hour would cost...

Do minimum wages reduce in-work-poverty and wage inequality? Or can alternative policies do better? We evaluate theses issues for the exemplary case of Germany that suffers from high unemployment among low-skilled workers and rising wage dispersion at the bottom of the wage distribution. We...

We show that a minimum wage introduced in the presence of asymmetric information about worker productivities will lead to lower unemployment levels than predicted by the standard labour market model with heterogeneous labour and symmetric information.

In this paper, we attempt to renew the interest in marginal employment subsidies. Such subsidies are paid only for a firm's additional employment exceeding some reference level and create larger employment stimuli at lower fiscal costs than general wage subsidies for all workers. If the hiring...

Women earn less than men but are not less satisfied with life. This paper argues that norms on the appropriate pay for women compared to men explain these findings. We take citizens? approval of an equal rights amendment to the Swiss constitution as a proxy for the norm that ?women and men shall...