The Macroeconomic Effects of the Wage Gap between Regular and Non-Regular Employment and Minimum Wages
AbstractWe analyze the effect of the wage gap between regular and non-regular employment on a macroeconomy by using a Keynesian dynamic model. If the steady state equilibrium exhibits the stagnationist regime, the size of the reserve army effect affects the stability of the equilibrium. On the other hand, if the steady state equilibrium exhibits the exhilarationist regime, an increase in the wage gap destabilizes the equilibrium. The introduction of the minimum wage is desirable in that it mitigates fluctuations of business cycles. However, the introduction of an inappropriate minimum wage policy leads to the real wage and employment rate that are lower than the steady state values.
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Bibliographic InfoPaper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-12-003.
Length: 24 pages
Date of creation: May 2012
Date of revision:
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More information through EDIRC
wage gap; regular and non-regular employment; minimum wage; demandled growth model;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
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- Srinivas Raghavendra, 2006. "Limits to Investment Exhilarationism," Journal of Economics, Springer, Springer, vol. 87(3), pages 257-280, 04.
- Marc Lavoie, 2009. "Cadrisme within a Post-Keynesian Model of Growth and Distribution," Review of Political Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 21(3), pages 369-391.
- Peter Flaschel & Alfred Greiner & Camille Logeay & Christian Proano, 2012. "Employment cycles, low income work and the dynamic impact of wage regulations. A macro perspective," Journal of Evolutionary Economics, Springer, Springer, vol. 22(2), pages 235-250, April.
- Flaschel, Peter & Greiner, Alfred, 2009. "Employment cycles and minimum wages. A macro view," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 20(4), pages 279-287, December.
- Daniele Tavani & Peter Flaschel & Lance Taylor, 2011. "Estimated non-linearities and multiple equilibria in a model of distributive-demand cycles," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 25(5), pages 519-538, October.
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