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Hitting two birds with one stone: A tale on the (not so) secret miracle of minimum wages

Author

Listed:
  • Friedrich Leopold Sell

    (Universität der Bundeswehr München 85577 Neubiberg, Germany)

  • Michael Öllinger

    (Universität der Bundeswehr München 85577 Neubiberg, Germany)

Abstract

In this note, we recall that unions traditionally pursue a policy of pushing higher average wages and, at the same time, for a compression of the structure of wages and salaries, which is some sort of equity. Given the precipitous fall of union density in many, if not all, OECD countries, the actual good climate for minimum wage policy comes at no surprise. Despite the fact that unions do dislike the intervention of labor market policy to the detriment of tariff autonomy, we can show that minimum wages are capable of serving both of the above-mentioned goals of unions and also help increase the overall wage quota in the economy. Hence, it can be concluded that the unions have a double dividend when inviting policy makers to pursue a policy of minimum wages: both the average wage rate can be increased and the dispersion of wages be lowered, ceteris paribus. Classification JEL: J51; J38; J58

Suggested Citation

  • Friedrich Leopold Sell & Michael Öllinger, 2017. "Hitting two birds with one stone: A tale on the (not so) secret miracle of minimum wages," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 5(3), pages 26-30, June.
    • Handle: RePEc:lrc:lareco:v:5:y:2017:i:3:p:26-30
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Average and minimum wages; Strategy of unions; Wage dispersion; Wage quota.;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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