Minimum wage, exports and growth
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".Download Info
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Paper provided by CEPREMAP in its series CEPREMAP Working Papers (Couverture Orange) with number 0109.Length: 25 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:cpm:cepmap:0109
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Keywords:Other versions of this item:
- Askenazy, Philippe, 2003. "Minimum wage, exports and growth," European Economic Review, Elsevier, vol. 47(1), pages 147-164, February.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-05-14 (All new papers)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- 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 and Francis Journals, vol. 22(3), pages 299-320.
- Arantza Gorostiaga & Juan Francisco Rubio-Ramírez, 2004. "Optimal minimum wage in a competitive economy," Working Paper 2004-30, Federal Reserve Bank of Atlanta.
- Mo, Pak Hung, 2011. "Minimum Wage Legislation and Economic Growth: Channels and Effects," MPRA Paper 35820, University Library of Munich, Germany.
- Luciano Fanti & Luca Gori, 2009.
"On economic growth and minimum wages,"
Discussion Papers
2009/78, Dipartimento di Scienze Economiche (DSE), University of Pisa, Pisa, Italy.
- Luciano Fanti & Luca Gori, 2011. "On economic growth and minimum wages," Journal of Economics, Springer, vol. 103(1), pages 59-82, May.
- Fanti, Luciano & Gori, Luca, 2010. "On economic growth and minimum wages," MPRA Paper 25842, University Library of Munich, Germany.
- Gorostiaga, Arantza & Rubio-Ramirez, Juan F., 2007.
"Optimal minimum wage in a competitive economy: An alternative modelling approach,"
Economic Modelling,
Elsevier, vol. 24(5), pages 778-796, September.
- 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.
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