A Comment to "Minimum Wages for Ronald McDonald Monopsonies - A Theory of Monopsonistic Competition" by V Bhaskar and Ted To
AbstractBhaskar and To (1999) develop a model of monopsonistic competition and solve explicitly for equilibrium. While a minimum wage set just above the unconstrained optimum leads firms to increase employment it also causes firm exit as profits fall. In this note I show that the employment and welfare effects of the minimum wage which Bhaskar and To had thought to be ambiguous when firm exit was accounted for are in fact unambiguously positive.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200118.
Length: 9 pages
Date of creation: 15 Sep 2001
Date of revision:
Monopsony; minimum wage; employment;
Find related papers by JEL classification:
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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