. 2020 Aug 25;196:109503. doi: 10.1016/j.econlet.2020.109503

Table 1.

An example with three employees.

		Level of total reduction
		10% ($45,000)	20% ($90,000)	30% ($135,000)
$α = 0$	$t_{1}$	0	0	0
	$t_{2}$	0	0	0.1167
	$t_{3}$	0.18	0.36	0.47
	$\frac{1}{N} \sum p$	0.0661	0.1488	0.2530
$α = 0.25$	$t_{1}$	0	0	0
	$t_{2}$	0	0.0690	0.2024
	$t_{3}$	0.18	0.3186	0.4186
	$\frac{1}{N} \sum p$	0.1985	0.1517	0.2561
$α = 0.5$	$t_{1}$	0	0	0
	$t_{2}$	0.0126	0.1329	0.2543
	$t_{3}$	0.1725	0.2802	0.3874
	$\frac{1}{N} \sum p$	0.0673	0.1572	0.2612
$α = 0.75$	$t_{1}$	0	0.0757	0.1912
	$t_{2}$	0.0648	0.1708	0.2744
	$t_{3}$	0.1411	0.2424	0.3371
	$\frac{1}{N} \sum p$	0.0730	0.1812	0.3147
$α = 0.9$	$t_{1}$	0.0523	0.1576	0.2629
	$t_{2}$	0.0867	0.1881	0.2896
	$t_{3}$	0.1175	0.2156	0.3136
	$\frac{1}{N} \sum p$	0.0898	0.2076	0.3411
$α = 0.99$	$t_{1}$	0.0956	0.1961	0.2966
	$t_{2}$	0.0987	0.1988	0.2990
	$t_{3}$	0.1017	0.2015	0.3013
	$\frac{1}{N} \sum p$	0.1039	0.2217	0.3552

Notes: This table reports the optimal reduction rates (as a percentage of wages) and average “pain” experienced by a firm with three employees. For this example, $w_{1} = $$ 50,000, $w_{2} = $$ 150,000, and $w_{3} = $$ 250,000, and $p (w, r) = ln (w) - ln (w - r)$ .