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The Federal Minimum Wage, Inflation, and Employment

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  • John F. Boschen
  • Herschel I. Grossman

Abstract

This study investigates the effects of Federal minimum wage policy on mini-mum wage employment, aggregate employment, and average wage rates. The theoretical analysis focuses on the possible effect of the Federal minimum wage in constraining wages and employment in a subset of labor markets, on the possible responses of labor suppliers to these constraints, and on the possible role of the policy of presetting the nominal minimum wage in making monetary policy nonneutral. Among the elements of the theoretical framework that are both distinctive and important are the assumptions that both the demands and supplies of labor services in the subset of constrained markets depend on the expected relative minimum wage in the near and distant future, as well as on the current relative minimum wage and on past levels of employment, and that the relevant expectations of both workers and employers about relative minimum wages are "rational."

Suggested Citation

  • John F. Boschen & Herschel I. Grossman, 1981. "The Federal Minimum Wage, Inflation, and Employment," NBER Working Papers 0652, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0652
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    Cited by:

    1. Charles Brown & Curtis Gilroy & Andrew Kohen, 1983. "Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment and Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 3-31.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2101-2163 is not listed on IDEAS

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