Advanced Search
MyIDEAS: Login to save this paper or follow this series

Setting the Minimum Wage

Contents:

Author Info

  • Boeri, Tito

    ()
    (Bocconi University)

Abstract

The process leading to the setting of the minimum wage so far has been fairly overlooked by economists. This paper suggests that this is a serious limitation as the setting regime contributes to explain cross-country variation in the fine-tuning of the minimum wage, hence in the way in which the trade-off between reducing poverty among working people and shutting down low productivity jobs is addressed. There are two common ways of setting national minimum wages: they are either government legislated or are the outcome of collective bargaining agreements, which are extended erga omnes to all workers. We develop a simple model relating the level of the minimum wage to the setting regime. Next, we exploit a new data set on minimum wages in 66 countries that had already or introduced a minimum wage in the period 1981-2005 to test the implications of the model. We find that a Government legislated minimum wage is lower than a wage floor set within collective agreements. This effect survives to several robustness checks and hints at a causal relation between the setting regime and the level of the minimum wage.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp4335.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4335.

as in new window
Length: 30 pages
Date of creation: Jul 2009
Date of revision:
Publication status: published in: Labour Economics, 2012, 19 (3), 281-290
Handle: RePEc:iza:izadps:dp4335

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: statutory minimum; collective bargaining; minimum wages;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Tito Boeri & Michael C. Burda, 2009. "Preferences for Collective Versus Individualised Wage Setting," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 119(540), pages 1440-1463, October.
  2. Neumark, David & Wascher, William L., 2007. "Minimum Wages and Employment," Foundations and Trends(R) in Microeconomics, now publishers, now publishers, vol. 3(1–2), pages 1-182, March.
  3. André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository, ULB -- Universite Libre de Bruxelles 2013/8078, ULB -- Universite Libre de Bruxelles.
  4. Orley Ashenfelter & David Card, 1984. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," NBER Working Papers 1489, National Bureau of Economic Research, Inc.
  5. Leif Danziger, 2009. "The elasticity of labor demand and the minimum wage," Journal of Population Economics, Springer, Springer, vol. 22(3), pages 757-772, July.
  6. Christopher J. Flinn, 2006. "Minimum Wage Effects on Labor Market Outcomes under Search, Matching, and Endogenous Contact Rates," Econometrica, Econometric Society, Econometric Society, vol. 74(4), pages 1013-1062, 07.
  7. Uri, Noel D & Mixon, J Wilson, Jr, 1980. "An Economic Analysis of the Determinants of Minimum Wage Voting Behavior," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 23(1), pages 167-77, April.
  8. William Brown, 2009. "The Process of Fixing the British National Minimum Wage, 1997-2007," British Journal of Industrial Relations, London School of Economics, London School of Economics, vol. 47(2), pages 429-443, 06.
  9. Pierre Cahuc & Yann Algan, 2007. "Social Attitudes and Economic Development : An Epidemiological Approach," Sciences Po publications, Sciences Po 2935, Sciences Po.
  10. Nickell, S J & Andrews, M, 1983. "Unions, Real Wages and Employment in Britain 1951-79," Oxford Economic Papers, Oxford University Press, vol. 35(0), pages 183-206, Supplemen.
  11. Dani Rodrik, 1998. "Democracies Pay Higher Wages," NBER Working Papers 6364, National Bureau of Economic Research, Inc.
  12. Assar Lindbeck & Sten Nyberg & Jšrgen W. Weibull, 1999. "Social Norms And Economic Incentives In The Welfare State," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 1-35, February.
  13. Silberman, Jonathan I & Durden, Garey C, 1976. "Determining Legislative Preferences on the Minimum Wage: An Economic Approach," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 84(2), pages 317-29, April.
  14. André Blais & Jean-Michel Cousineau & Kenneth McRoberts, 1989. "The determinants of minimum wage rates," Public Choice, Springer, Springer, vol. 62(1), pages 15-24, July.
  15. Boeri, Tito & Macis, Mario, 2010. "Do unemployment benefits promote or hinder job reallocation?," Journal of Development Economics, Elsevier, Elsevier, vol. 93(1), pages 109-125, September.
  16. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  17. Boeri, Tito & Macis, Mario, 2008. "Do Unemployment Benefits Promote or Hinder Structural Change?," IZA Discussion Papers 3371, Institute for the Study of Labor (IZA).
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. M. Ali Choudhary & Saima Mahmood & Sajawal Khan & Waqas Ahmed & Gylfi Zoega, 2013. "Sticky Wages in a Developing Country: Lessons from Structured Interviews in Pakistan," School of Economics Discussion Papers, School of Economics, University of Surrey 0213, School of Economics, University of Surrey.
  2. Benassi, Chiara, 2011. "The implementation of minimum wage : challenges and creative solutions," ILO Working Papers, International Labour Organization 462988, International Labour Organization.
  3. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).
  4. Eliav Danziger & Leif Danziger, 2014. "A Pareto-Improving Minimum Wage," CESifo Working Paper Series 4762, CESifo Group Munich.
  5. Andrea Garnero & Stephan Kampelmann & François Rycx, 2013. "Sharp Teeth or Empty Mouths? Revisiting the Minimum Wage Bite with Sectoral Data," Working Papers CEB, ULB -- Universite Libre de Bruxelles 13-016, ULB -- Universite Libre de Bruxelles.
  6. Pedro S. Martins, 2014. "30,000 minimum wages: The economic effects of collective agreement extensions," Working Papers, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research 51, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  7. Danziger, Eliav & Danziger, Leif, 2014. "A Pareto-Improving Minimum Wage," IZA Discussion Papers 8123, Institute for the Study of Labor (IZA).
  8. Ive Marx & Sarah Marchal & Brian Nolan, 2012. "GINI DP 56: Mind the Gap: Net Incomes of Minimum Wage Workers in the EU and the US," GINI Discussion Papers, AIAS, Amsterdam Institute for Advanced Labour Studies 56, AIAS, Amsterdam Institute for Advanced Labour Studies.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp4335. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.