Recent empirical literature documents that targeted tax reductions or minimum wages can have unintended reallocation and spillover effects on workers not directly targeted by these policies. We quantify these effects using an equilibrium search-and-matching model estimated on French data before...

This paper investigates the effects of payroll taxes on unemployment and welfare in a two-sector economy characterized by market power in product and labor markets. The two sectors differ in their degree of market competitiveness. It turns out that the relative tax pressure influences employment...

Conventional wisdom states that the statutory split of payroll taxation between firms and workers is of no macroeconomic relevance, because the tax incidence is fully determined by the market structure. This paper breaks with this view by establishing a theoretical link between the statutory...

We analyze the redistributive (dis)advantages of a minimum wage over income taxation in competitive labor markets. A minimum wage causes more unemployment, but also leads to more skill formation as unemployment is concentrated on low-skilled workers. A simple condition based on three sufficient...

This paper presents the properties of optimal piecewise linear income tax systems for families based on joint and individual incomes respectively. It models the interaction between the wage rates of mothers as "second earners" and variation in child care prices and productivities as determinants...

Despite the importance of payroll taxes, and the clear defects in the rules, legislative proposals for change are limited, addressing primarily the lack of parity between a small service business carried on by an S corporation and directly or through a partnership. This report argues for more...