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The Effects of a Minimum Wage in a Dsge Model: an Extension of the Bénassy Model

Author

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  • Heberer, Eva Maria.

    (Institute of Public Economics at the School of Business and Economics at the Humboldt- Universität zu Berlin.)

Abstract

Economic analyses discussing minimum wages find ambiguous results. The theory mostly predicts a negative effect for the economy, whereas other studies even find positive effects. This work implements a minimum wage in the well known framework by Bénassy (1995a) in both nominal and real terms. Calibration of the model supports the traditional findings: A minimum wage lowers the overall output which cannot be compensated by a positive technology shock. Consumption and investment decline if output does. Thus, the economy as a whole is hurt by a minimum wage. / La discusión sobre salarios mínimos encuentra resultados ambiguos. La teoría predice un efecto negativo para la economía, sin embargo otros estudios encuentran efectos positivos. Este trabajo implementa un salario mínimo en el marco de Bénassy (1995a) en términos nominales y reales. La calibración del modelo apoya las conclusiones tradicionales: un salario mínimo disminuye la producción total que no puede ser compensada por un shock positivo de tecnología. El consumo y la inversión disminuyen si la producción lo hace. Así, la economía en su conjunto se ve perjudicada por un salario mínimo.

Suggested Citation

  • Heberer, Eva Maria., 2010. "The Effects of a Minimum Wage in a Dsge Model: an Extension of the Bénassy Model," Panorama Económico, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 0(10), pages 7-39, primer se.
  • Handle: RePEc:ipn:panora:v:v:y:2010:i:10:p:7-39
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    References listed on IDEAS

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    Cited by:

    1. Alisher Tolepbergen, 2021. "Minimum Wage Shocks in an Estimated DSGE Model with Underreporting," NAC Analytica Working Paper 20, NAC Analytica, Nazarbayev University, revised Dec 2021.

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    More about this item

    Keywords

    Minimum wages; labor market; business cycles. / Salarios mínimos; mercado de trabajo; ciclos de negocios.;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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