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How Do We Know That Real Wages Are Too High?

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  • Alan Manning

Abstract

It is a common belief that the existence of involuntary unemployment implies that wages are too high and that wage moderation should be encouraged as a way to keep unemployment down. This paper argues for a reconsideration of this view by showing that it is possible for a binding minimum wage to reduce unemployment or increase employment even if there is involuntary unemployment.

Suggested Citation

  • Alan Manning, 1995. "How Do We Know That Real Wages Are Too High?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1111-1125.
    • Handle: RePEc:oup:qjecon:v:110:y:1995:i:4:p:1111-1125.
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