Publication
Sep 2006
This paper explores the far-reaching implications of low-wage subsidies on aggregate employment. The authors argue that those subsidies have three important effects. They promote employment of unskilled workers and by raising the payoff of unskilled work reduce the incentive to become skilled. Moreover, they stress the additional tax burdens for skilled workers involved in subsidizing unskilled work. The paper examines these effects in a theoretical model for the German labor market.
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English (PDF, 27 pages, 270 KB) |
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Author | Frank Oskamp, Dennis J Snower |
Series | Kiel Institute Working Papers |
Issue | 1292 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2006 Kiel Institute for the World Economy |