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Minimum wage, exports and growth

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  • Askenazy, Philippe

Abstract

Using 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 Info

Paper provided by CEPREMAP in its series CEPREMAP Working Papers (Couverture Orange) with number 0109.

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Length: 25 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:cpm:cepmap:0109

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  1. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, American Economic Association, vol. 82(4), pages 942-63, September.
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Cited by:
  1. Gorostiaga Alonso, Miren Arantzazu & Rubio-Ramírez, Juan F., 2006. "Optimal Minimum Wage in a Competitive Economy: an Alternative Modelling Approach," DFAEII Working Papers 2004-07, University of the Basque Country - Department of Foundations of Economic Analysis II.
  2. N. Bauduin & N. Chusseau & J. Hellier, 2008. "Combining minimum wage and exchange rate policy to release the external constraint on growth," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 22(3), pages 299-320.
  3. Arantza Gorostiaga & Juan Francisco Rubio-Ramírez, 2004. "Optimal minimum wage in a competitive economy," Working Paper, Federal Reserve Bank of Atlanta 2004-30, Federal Reserve Bank of Atlanta.
  4. Luciano Fanti & Luca Gori, 2011. "On economic growth and minimum wages," Journal of Economics, Springer, Springer, vol. 103(1), pages 59-82, May.
  5. Mo, Pak Hung, 2011. "Minimum Wage Legislation and Economic Growth: Channels and Effects," MPRA Paper 35820, University Library of Munich, Germany.

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