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However, what we want to capture is the causal relationship that represents whether implementing wage cuts contributes to avoiding layoffs.
This supports the theoretical implication that implementing wage cuts can be a potential device for reducing layoffs.
For this purpose, we extend the LEN model which is frequently used in the executive compensation literature to include taxation.3 We initially introduce the LEN model without taxes to then illustrate the impact of taxation first by implementing wage tax only (unilateral approach) and subsequently by implementing multiple taxes affecting both contracting parties (multilateral approach).
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But Tsipras, whose popularity has waned considerably since his leftwing government implemented wage cuts and tax increases it once vowed to overturn, appears in defiant mood.
Despite the fact that progressive wage taxation is prevailing in practice, researchers usually implement wage taxes with proportional tax rates.
Next, we show empirically the trend whereby firms with performance-based payment systems are unlikely to implement wage cuts.
In the following, we implement wage taxes, (tau _w), corporate income taxes, (tau _c), and dividend taxes, (tau _d).
where (underline {b}) is the minimum level of b, with which a firm implements wage cuts only.
There are, of course, also differences in the administrative arrangements used to implement wage subsidies (see Section 3).
On the other hand, Cyprus implemented wage freezes and cuts during 2011 2014, and still, the estimated wage gap increased by a substantial amount.
(2001) implement wage tax in a binary model and find that the optimal effort level is not affected by wage taxation.
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