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- W2102631662 abstract "The paper investigates the role of the minimum wage in a competitive economy in which there is underreporting of earnings by employed labour. The minimum wage induces higher compliance by some low-productivity workers and transforms a nominally neutral fiscal system into a regressive one. A spike in the wage distribution at the minimum wage level appears and a positive correlation between the size of the spike and the size of the informal economy is predicted and documented using cross-country data for Europe. A further result is that employees whose officially declared earnings appear to be boosted by a minimum wage hike actually experience a decline in their true income. This prediction finds support in an empirical test using the massive increase in the minimum wage that took place in Hungary in 2001 as a quasi-natural experiment." @default.
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- W2102631662 date "2007-01-01" @default.
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- W2102631662 title "Minimum Wage and Tax Evasion: Theory and Evidence" @default.
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- W2102631662 doi "https://doi.org/10.2139/ssrn.988188" @default.
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