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Minimum Wage Politics in the Knowledge Economy: Evidence from Europe

Author

Listed:
  • Nagler, Paula

    (Institute for Housing and Urban Development Studies, Erasmus University Rotterdam)

  • Schuller, Emanuel

    (Institute for Housing and Urban Development Studies, Erasmus University Rotterdam)

Abstract

The emergence of the knowledge economy has transformed European labour markets and the political economy of social policy. Yet, despite the growing use of statutory minimum wages (SMWs) in Europe, their relationship to the knowledge economy has not been comprehensively analysed. This paper examines how knowledge-economy development is associated with the presence and levels of SMWs in 21 European countries from 1995 to 2021. Using probit models and fixed-effects panel regressions, we find that SMW outcomes depend more on the specific knowledge-economy trajectory than on its overall degree. While the knowledge economy index is weakly associated with SMW outcomes, its service- and manufacturing-oriented dimensions show opposing relationships with SMW presence and levels. Random forest analyses indicate that knowledge-economy proxies are among the strongest predictors of SMW outcomes.

Suggested Citation

  • Nagler, Paula & Schuller, Emanuel, 2026. "Minimum Wage Politics in the Knowledge Economy: Evidence from Europe," IZA Discussion Papers 18993, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18993
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    Keywords

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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