Estimating incentives to raise wages

The concept of the marginal effective tax rate (METR) is key in our simulations to measure the incentives of the employer to raise its employees wages'.
The METR refers to the fraction, let's call it \(C\), of a certain increase in the employer's labor cost received by the employee.
Noting \(S_{CT}\) as the net wage associated with a labor cost \(CT\) for the employer, for a variation in labor cost \(\delta\), the marginal capture rate can be expressed as : \(C = \frac{S_{CT+\delta} - S_{CT}}{\delta} \)
Thus, an effective rate of 70% leads to an increase in payroll costs of €100 to distribute an additional €30 to the employee, once we've taken into account: the additional employer and employee contributions.

In our empirical simulations the marginal effective tax rate is calculated with a step of €317 corresponding to an increase of the gross salary of 0.01 minimum wage.