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A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market

Author

Listed:
  • Danziger, Eliav

    (Simon Fraser University)

  • Danziger, Leif

    (Ben Gurion University)

Abstract

This paper explores how a minimum wage affects a firm's behavior with a competitive labor market and an uncertain export cost. The model provides several novel insights which are consistent with recent empirical evidence. Thus, a minimum wage increases an exporter's foreign-market size and may cause a non-exporter to start exporting. The foreign-market size may increase so much that, although the home-market size decreases, the overall firm size increases.

Suggested Citation

  • Danziger, Eliav & Danziger, Leif, 2024. "A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market," IZA Discussion Papers 16846, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp16846
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    References listed on IDEAS

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    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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