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

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  • Colm McLaughlin

Abstract

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.

Suggested Citation

  • Colm McLaughlin, 2007. "The productivity enhancing Impacts of the Minimum Wage: Lessons from Denmark, New Zealand and Ireland," Working Papers wp342, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp342
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp342.pdf
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    References listed on IDEAS

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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, June.
    3. Simon Deakin & Frank Wilkinson, 2000. "Capabilities, Spontaneous Order, And Social Rights," Working Papers wp174, Centre for Business Research, University of Cambridge.
    4. Wilkinson, Frank, 1983. "Productive Systems," Cambridge Journal of Economics, Oxford University Press, vol. 7(3-4), pages 413-429, September.
    5. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752.
    6. 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.
    7. Tor Eriksson & Niels Westergaard-Nielsen, 2009. "Wage and Labor Mobility in Denmark, 1980-2000," NBER Chapters,in: The Structure of Wages: An International Comparison, pages 101-123 National Bureau of Economic Research, Inc.
    8. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    9. 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.
    10. 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.
    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, March.
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    Cited by:

    1. World Bank, 2013. "Minimum Wage Policy : Lessons with a Focus on the ASEAN Region," World Bank Other Operational Studies 16687, The World Bank.

    More about this item

    Keywords

    National Minimum Wage; Low pay; Training; Productivity; Labour market coordination; Comparative employment relations.;

    JEL classification:

    • 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
    • J80 - Labor and Demographic Economics - - Labor Standards - - - General
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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