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10.1016/j.econlet.2020.109503

http://scihub22266oqcxt.onion/10.1016/j.econlet.2020.109503
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suck abstract from ncbi


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pmid32863482      Econ+Lett 2020 ; 196 (ä): 109503
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  • Sharing the sacrifice, minimizing the pain: Optimal wage reductions #MMPMID32863482
  • Miller K
  • Econ Lett 2020[Nov]; 196 (ä): 109503 PMID32863482show ga
  • Faced with temporary revenue shocks, employers may implement wage reductions - a common response to COVID-19 for U.S. universities. I provide a framework for optimal reductions when labor is inelastic wherein a planner balances "minimizing the pain" and "sharing the sacrifice." I show that for a broad class of utility functions the optimal schedule includes (1) a cutoff wage below which the reduction is zero and (2) weakly progressive reduction rates above the cutoff wage. I illustrate the results using data from a large U.S. university.
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