employment. The evidence on the effect of the average income tax rate on pretax wages is more mixed, but it also points to the …We study the empirical relationship between labor taxation and pretax wages in Italy. We find that higher tax … progressivity increases pretax wages. To explain this result, we introduce in an informal way a relative wage effect and argue that …

care about their relative wages, and show that the presence of a relative wage concern could help generation a positive …