Optimal Fiscal Policy with Rationing in the Labor Market


Autoria(s): Gorostiaga Alonso, Miren Arantzazu
Data(s)

08/02/2012

08/02/2012

01/07/2002

Resumo

Published as an article in: Topics in Macroeconomics, 2005, vol. 5, issue 1, article 17.

This paper characterizes the optimal fiscal policy when it is assumed that there exists a minimum wage below which no worker can be hired. The rigidity due to the minimum wage legislation can lead to equilibria in which the supply side of the labor market is rationed. One of the main results of the paper is that allocations in which the worker is involuntarily unemployed can be found to be optimal. The main conclusion with respect to the stabilizing properties of the optimal policy is that it should not be used to offset the negative effects of the cycle in the economy.

Identificador

1988-088X

http://hdl.handle.net/10810/6794

RePEc:ehu:dfaeii:200229

Idioma(s)

eng

Publicador

University of the Basque Country, Department of Foundations of Economic Analysis II

Relação

DFAEII 2002.29

Direitos

info:eu-repo/semantics/openAccess

Palavras-Chave #Ramsey problem #disequilibrium theory #minimum wage #involuntary unemployment
Tipo

info:eu-repo/semantics/workingPaper