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How are minimum wages set?

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  • Richard Dickens

    (University of Sussex, UK and IZA, Germany)

Abstract

The minimum wage has never been as high on the political agenda as it is today, with politicians in Germany, the UK, the US, and other OECD countries implementing substantial increases in the rate. One reason for the rising interest is the growing consensus among economists and policymakers that minimum wages, set at the right level, may help low paid workers without harming employment prospects. But how should countries set their minimum wage rate? The processes that countries use to set their minimum wage rate and structure differ greatly, as do the methods for adjusting it. The different approaches have merits and shortcomi

Suggested Citation

  • Richard Dickens, 2023. "How are minimum wages set?," IZA World of Labor, Institute of Labor Economics (IZA), pages 2112-2112, September.
    • Handle: RePEc:iza:izawol:journl:2023:n:211v2
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    References listed on IDEAS

    as
    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
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    4. Hyslop, Dean & Stillman, Steven, 2007. "Youth minimum wage reform and the labour market in New Zealand," Labour Economics, Elsevier, vol. 14(2), pages 201-230, April.
    5. Alan Manning, 2021. "The Elusive Employment Effect of the Minimum Wage," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 3-26, Winter.
    6. repec:oup:ecpoli:v:27:y:2012:i:69:p:99-142 is not listed on IDEAS
    7. Boeri, Tito, 2012. "Setting the minimum wage," Labour Economics, Elsevier, vol. 19(3), pages 281-290.
    8. Arindrajit Dube & Attila Lindner, 2021. "City Limits: What Do Local-Area Minimum Wages Do?," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 27-50, Winter.
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    Citations

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    Cited by:

    1. Andrew J. Seltzer, 2024. "The Political Economy of Minimum Wage Setting: The Factories and Shops Act of Victoria (Australia), 1896-1913," CEH Discussion Papers 02, Centre for Economic History, Research School of Economics, Australian National University.
    2. Ernest Dautovic & Harald Hau & Yi Huang, 2017. "The Consumption Response to Minimum Wages: Evidence from Chinese Households," IHEID Working Papers 01-2017, Economics Section, The Graduate Institute of International Studies.
    3. Seltzer, Andrew, 2024. "The Political Economy of Minimum Wage Setting: The Factories and Shops Act of Victoria (Australia), 1896-1913," IZA Discussion Papers 16788, Institute of Labor Economics (IZA).
    4. Eva Militaru & Madalina Ecaterina Popescu & Amalia Cristescu & Maria Denisa Vasilescu, 2019. "Assessing Minimum Wage Policy Implications upon Income Inequalities. The Case of Romania," Sustainability, MDPI, vol. 11(9), pages 1-20, May.
    5. Sotomayor, Orlando J., 2021. "Can the minimum wage reduce poverty and inequality in the developing world? Evidence from Brazil," World Development, Elsevier, vol. 138(C).
    6. Ni, Bin & Kurita, Kyosuke, 2020. "The minimum wage, exports, and firm performance: Evidence from Indonesia," Journal of Asian Economics, Elsevier, vol. 69(C).

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    More about this item

    Keywords

    minimum wages; wage setting; expert body;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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