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The Minimum Wage from a Two-Sided Perspective

Author

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  • Brown, Alessio J. G.

    (Centre for Population, Development and Labour Economics (POP))

  • Merkl, Christian

    (University of Erlangen-Nuremberg)

  • Snower, Dennis J.

    (University College London)

Abstract

This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms' job offer and workers' job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show that sufficiently low minimum wages may do no harm to employment, since their job-offer disincentives are countervailed by their job-acceptance incentives.

Suggested Citation

  • Brown, Alessio J. G. & Merkl, Christian & Snower, Dennis J., 2014. "The Minimum Wage from a Two-Sided Perspective," IZA Discussion Papers 8252, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8252
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    11. Dube, Andrajit & Lester, T. William & Reich, Michael, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," Institute for Research on Labor and Employment, Working Paper Series qt86w5m90m, Institute of Industrial Relations, UC Berkeley.
    12. Abowd, John M. & Kramarz, Francis & Margolis, David N. & Philippon, Thomas, 2000. "The Tail of Two Countries: Minimum Wages and Employment in France and the United States," IZA Discussion Papers 203, Institute of Labor Economics (IZA).
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    Cited by:

    1. Braun Helge & Döhrn Roland & Krause Michael & Micheli Martin & Schmidt Torsten, 2020. "Macroeconomic Long-Run Effects of the German Minimum Wage when Labor Markets are Frictional," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 351-386, April.
    2. David Neumark, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 293-329, August.
    3. Monika Köppl-Turyna & Michael Christl & Dénes Kucsera, 2019. "Beschäftigungseffekte von Mindestlöhnen: Die Dosis macht das Gift," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(02), pages 40-46, January.
    4. Salverda Wiemer, 2025. "The Netherlands’ Minimum Wage 1969–2022: Can We Learn from Decline?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 245(1-2), pages 45-78.
    5. Braun, Helge & Döhrn, Roland & Krause, Michael & Micheli, Martin & Schmidt, Torsten, 2020. "Macroeconomic Long-Run Effects of the German Minimum Wage when Labor Markets are Frictional," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 351-386.
    6. Arne Heise, 2022. "Mindestlöhne, Beschäftigung und die „Harmonie der Täuschungen“," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 48(1), pages 83-107.
    7. Christl, Michael & Köppl Turyna, Monika & Kucsera, Denes, 2015. "Employment effects of minimum wages in Europe revisited," MPRA Paper 65761, University Library of Munich, Germany.
    8. Caliendo Marco & Wittbrodt Linda & Schröder Carsten, 2019. "The Causal Effects of the Minimum Wage Introduction in Germany – An Overview," German Economic Review, De Gruyter, vol. 20(3), pages 257-292, August.
    9. Mark Borgschulte & Heepyung Cho, 2020. "Minimum Wages and Retirement," ILR Review, Cornell University, ILR School, vol. 73(1), pages 153-177, January.
    10. Holtemöller, Oliver & Pohle, Felix, 2020. "Employment effects of introducing a minimum wage: The case of Germany," Economic Modelling, Elsevier, vol. 89(C), pages 108-121.
    11. Arabzadeh, Hamzeh & Balleer, Almut & Gehrke, Britta & Taskin, Ahmet Ali, 2024. "Minimum wages, wage dispersion and financial constraints in firms," European Economic Review, Elsevier, vol. 163(C).
    12. Brown, Alessio J.G. & Kohlbrecher, Britta & Merkl, Christian & Snower, Dennis J., 2021. "The effects of productivity and benefits on unemployment: Breaking the link," Economic Modelling, Elsevier, vol. 94(C), pages 967-980.
    13. Cristian Valeriu Paun & Radu Nechita & Alexandru Patruti & Mihai Vladimir Topan, 2021. "The Impact of the Minimum Wage on Employment: An EU Panel Data Analysis," Sustainability, MDPI, vol. 13(16), pages 1-17, August.
    14. Michael Christl & Monika Köppl-Turyna & Dénes Kucsera, 2017. "Effects of collective minimum wages on youth employment in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(4), pages 781-805, November.
    15. Michael Christl & Monika Köppl‐Turyna & Dénes Kucsera, 2018. "Revisiting the Employment Effects of Minimum Wages in Europe," German Economic Review, Verein für Socialpolitik, vol. 19(4), pages 426-465, November.
    16. Michael Christl & Monika Köppl-Turyna & Dénes Kucsera, 2019. "Employment Effects of Minimum Wages," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(04), pages 01-08, January.
    17. Adam Brzezinski, 2017. "Synergies in Labour Market Institutions: the Nonlinear Effect of Minimum Wages on Youth Employment," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(2), pages 251-263, June.
    18. David Neumark, 2017. "The Employment Effects of Minimum Wages: Some Questions We Need to Answer," NBER Working Papers 23584, National Bureau of Economic Research, Inc.
    19. repec:ces:ifodic:v:16:y:2019:i:4:p:50000000004800 is not listed on IDEAS

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    Keywords

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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