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The productivity enhancing Impacts of the Minimum Wage: Lessons from Denmark, New Zealand and Ireland

  • Colm McLaughlin
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    There has been increasing interest of late in the question of whether minimum wage regulations can raise productivity through the 'shock effect'. This paper explores this question in comparative perspective, by examining the impact of minimum wage regulations and institutions in Denmark, New Zealand and Ireland. It argues that while they are important, a supportive institutional framework plays a far more crucial role in providing coordinated solutions to issues of market failure, such as inadequate levels of training. The paper 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. For the UK context, this raises the question as to whether Wages Councils in a modernised form might have some future role to play.

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    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp342.

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    Date of creation: Jun 2007
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    Handle: RePEc:cbr:cbrwps:wp342
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    1. Watson, Dorothy & Russell, Helen & O'Connell, Philip J., 2011. "The Changing Workplace," Papers RB2011/1/3, Economic and Social Research Institute (ESRI).
    2. Howard Gospel & Jim Foreman, 2006. "Inter-Firm Training Co-ordination in Britain," British Journal of Industrial Relations, London School of Economics, vol. 44(2), pages 191-214, 06.
    3. Wooseok Ok & Peter Tergeist, 2003. "Improving Workers' Skills: Analytical Evidence and the Role of the Social Partners," OECD Social, Employment and Migration Working Papers 10, OECD Publishing.
    4. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147, July.
    5. Wilkinson, Frank, 1983. "Productive Systems," Cambridge Journal of Economics, Oxford University Press, vol. 7(3-4), pages 413-29, September.
    6. 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.
    7. 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, 09.
    8. Tor Eriksson & Niels Westergaard-Nielsen, 2007. "Wage and Labor Mobility in Denmark, 1980-2000," NBER Working Papers 13064, National Bureau of Economic Research, Inc.
    9. Simon Deakin & Frank Wilkinson, 2000. "Capabilities, Spontaneous Order, And Social Rights," ESRC Centre for Business Research - Working Papers wp174, ESRC Centre for Business Research.
    10. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752, July.
    11. Kim Hoque & Scott Taylor & Emma Bell, 2005. "Investors in People: Market-led Voluntarism in Vocational Education and Training," British Journal of Industrial Relations, London School of Economics, vol. 43(1), pages 135-153, 03.
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