Minimum wage, exports and growth
AbstractUsing an endogenous growth model in an open economy, we study the impact of minimum wages on growth for an innovator country. We state that a minimum wage shifts efforts from production to R&D, but only in an open economy. Thus, it speeds up long-run growth in proportional to exports. Calibrations suggest the growth surplus can be significant. An empirical study on 11 OECD countries illustrate these results. The impact on welfare is ambiguous because the minimum wage induces unemployment. However, we show that in an open economy, a minimum wage associated with unemployment benefits can pareto dominate "laissez faire".
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Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 47 (2003)
Issue (Month): 1 (February)
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Web page: http://www.elsevier.com/locate/eer
Other versions of this item:
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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