Wage rigidity or fiscal redistribution? the unemployment bias of time consistent redistributive policies
By: by Etienne Lehmann
Series: Discussion paper -- no. 2116; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2116
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] /
Subjects: Wages; Income distribution; Government policy
Description: "Because of Time Inconsistency considerations, policymakers underestimate the drawbacks of wage rigidity as a redistributive tool. Consequently, they redistribute inefficiently income from high to low skilled workers. They typically implement too much wage rigidity whereas other means (in particular fiscal transfers) could achieve the same redistributive goal with less perverse effect on unemployment. Time inconsistency is more likely due to lack of credibility than to the short-term horizon of policymakers. Hence, policymaking processes should be reformed towards more transparent and binding agreements between government and social partners"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 5/8/2006.

Includes bibliographical references.

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