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The Productivity-Enhancing Impacts of the Minimum Wage: Lessons from Denmark and New Zealand

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  • Colm McLaughlin

Abstract

This article adds an international comparative perspective to the reflection on 100 years of minimum wage legislation in Britain by exploring the impact of minimum wage regulations and institutions in Denmark and New Zealand. In particular, it looks at the question of whether minimum wages can raise productivity through the 'shock effect'. It argues that while they will play a role, a supportive institutional framework is more important in providing coordinated solutions to issues of market failure, such as inadequate levels of training. The article suggests that sectoral bargaining institutions in low-paid sectors may have the potential to facilitate such coordination and enable the high-productivity model to emerge. Copyright (c) Blackwell Publishing Ltd/London School of Economics 2009.

Suggested Citation

  • Colm McLaughlin, 2009. "The Productivity-Enhancing Impacts of the Minimum Wage: Lessons from Denmark and New Zealand," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 327-348, June.
  • Handle: RePEc:bla:brjirl:v:47:y:2009:i:2:p:327-348
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    6. Jill Rubery, 1997. "Wages and the Labour Market," British Journal of Industrial Relations, London School of Economics, vol. 35(3), pages 337-366, September.
    7. Simon Deakin & Frank Wilkinson, 2000. "Capabilities, Spontaneous Order, And Social Rights," Working Papers wp174, Centre for Business Research, University of Cambridge.
    8. Wilkinson, Frank, 1983. "Productive Systems," Cambridge Journal of Economics, Oxford University Press, vol. 7(3-4), pages 413-429, September.
    9. Lassen, Morten & Sørensen, John Houman & Lindkvist Jørgensen, Anja & Møberg, Rasmus Juul, 2006. "Skill needs and the institutional framework: Conditions for enterprise-sponsored CVT - The case of Denmark," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-121, Social Science Research Center Berlin (WZB).
    10. Christopher L. ERICKSON & Daniel J.B. MITCHELL, 2007. "Monopsony as a metaphor for the emerging post-union labour market," International Labour Review, International Labour Organization, vol. 146(3-4), pages 163-187, September.
    11. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    12. Monder Ram & Paul Edwards & Mark Gilman & James Arrowsmith, 2001. "The Dynamics of Informality: Employment Relations in Small Firms and the Effects of Regulatory Change," Work, Employment & Society, British Sociological Association, vol. 15(4), pages 845-861, December.
    13. Finegold, David & Soskice, David, 1988. "The Failure of Training in Britain: Analysis and Prescription," Oxford Review of Economic Policy, Oxford University Press, vol. 4(3), pages 21-53, Autumn.
    14. James Arrowsmith & Mark W. Gilman & Paul Edwards & Monder Ram, 2003. "The Impact of the National Minimum Wage in Small Firms," British Journal of Industrial Relations, London School of Economics, vol. 41(3), pages 435-456, September.
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    Cited by:

    1. Michael Weber, 2016. "Wage Determination and Employment Adjustment in Croatia," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(1), pages 22-26, April.
    2. Deakin, Simon., 2013. "Addressing labour market segmentation : the role of labour law," ILO Working Papers 994834483402676, International Labour Organization.
    3. Thomas Turner & Michelle O’Sullivan, 2013. "Economic Crisis and the Restructuring of Wage Setting Mechanisms for Vulnerable Workers in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 44(2), pages 197-219.
    4. Zoe Adams & Simon Deakin, 2014. "Institutional Solutions to Precariousness and Inequality in Labour Markets," British Journal of Industrial Relations, London School of Economics, vol. 52(4), pages 779-809, December.
    5. Simon Deakin, 2013. "Addressing Labour Market Segmentation: The Role of Labour Law," Working Papers wp446, Centre for Business Research, University of Cambridge.
    6. Zoe Adams & Simon Deakin, 2014. "Institutional Solutions to Precariousness & Inequality in Labour Markets," Working Papers wp463, Centre for Business Research, University of Cambridge.
    7. Damian Grimshaw & Gerhard Bosch & Jill Rubery, 2014. "Minimum Wages and Collective Bargaining: What Types of Pay Bargaining Can Foster Positive Pay Equity Outcomes?," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 470-498, September.
    8. repec:ilo:ilowps:483448 is not listed on IDEAS

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