IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

On economic growth and minimum wages

  • Luciano Fanti
  • Luca Gori

We offer an analysis of the existence of a positive relationship between minimum wages and economic growth in a fairly standard general equilibrium, one-sector, two-period overlapping generations model, where the usual Romer-typed knowledge spill-over mechanism in production represents the engine of endogenous growth. It is shown that – contrary to the conventional view which has failed to pay due attention to dynamic contexts with labour market rigidities – the minimum-wage economy may grow faster than the competitive-wage economy in spite of a reduced employment rate and, in particular, a growth-maximising minimum wage does exist. A straightforward message is therefore that policymakers may appropriately use minimum wage policies to promote economic growth and individuals’ welfare.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ec.unipi.it/documents/Ricerca/papers/2009-78.pdf
Download Restriction: no

Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2009/78.

as
in new window

Length:
Date of creation: 01 Jan 2009
Date of revision:
Handle: RePEc:pie:dsedps:2009/78
Contact details of provider: Postal: Via Cosimo Ridolfi, 10 - 56124 PISA
Phone: +39 050 22 16 466
Fax: +39 050 22 16 384
Web page: http://www.ec.unipi.it
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August.
  2. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
  3. Alga Foschi, 2004. "The coast port industry in the USA: a key factor in the process of economic growth," Discussion Papers 2004/46, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  4. Askenazy, Philippe, 2003. "Minimum wage, exports and growth," European Economic Review, Elsevier, vol. 47(1), pages 147-164, February.
  5. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 47-104, 04.
  6. Hellwig, Martin F & Irmen, Andreas, 2001. "Wage Growth, Productivity Growth, and the Evolution of Employment," CEPR Discussion Papers 2927, C.E.P.R. Discussion Papers.
  7. Neumark, David & Wascher, William, 1995. "Minimum-Wage Effects on School and Work Transitions of Teenagers," American Economic Review, American Economic Association, vol. 85(2), pages 244-49, May.
  8. Meckl, Jurgen, 2004. "Accumulation of technological knowledge, wage differentials, and unemployment," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 65-82, March.
  9. Luciano Fanti & Luca Gori, 2008. "‘Backyard’ technology and regulated wages in a neoclassical OLG growth model," Discussion Papers 2008/74, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  10. Andrea Mario Lavezzi, . "Complex Dynamics in a Simple Model of Economic Specialization," Discussion Papers 2003/2, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  11. Nicola Meccheri, 2004. "Wages Behaviour and Unemployment in Keynes and New Keynesians Views. A Comparison," Discussion Papers 2004/41, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  12. Chris Papageorgiou & Fidel Pérez Sebastián & John Duffy, 2002. "Capital-Skill Complementarity? Evidence From A Panel Of Countries," Working Papers. Serie AD 2002-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  13. Akos Dombi, 2006. "Scale Effects in Idea-Based Growth Models: a Critical Survey," Discussion Papers 2006/60, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  14. Luciano Fanti & Luca Gori, 2007. "Economic Growth and Welfare in a Simple Neoclassical OLG Model with Minimum Wage and Consumption Taxes support," Discussion Papers 2007/68, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  15. Lorenzo Corsini & Elisabetta Olivieri, 2008. "Technological Change and the Wage Differential between Skilled and Unskilled Workers: Evidence from Italy," Discussion Papers 2008/73, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  16. Jappelli, Tullio & Padula, Mario, 2007. "Households' saving and debt in Italy," CFS Working Paper Series 2007/30, Center for Financial Studies (CFS).
  17. Nicola Meccheri, 2008. "A note on non-competes, bargaining and training by firms," Discussion Papers 2008/72, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  18. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
  19. Hipólito Simón, 2010. "International Differences in Wage Inequality: A New Glance with European Matched Employer-Employee Data," British Journal of Industrial Relations, London School of Economics, vol. 48(2), pages 310-346, 06.
  20. Pierre Cahuc & Cette Gilbert & André Zylberberg, 2008. "Salaire minimum et bas revenus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00638149, HAL.
  21. Toshiki Tamai, 2009. "Inequality, unemployment, and endogenous growth in a political economy with a minimum wage," Journal of Economics, Springer, vol. 97(3), pages 217-232, July.
  22. Luciano Fanti & Luca Gori, 2009. "Child policy solutions for the unemployment problem," Discussion Papers 2009/76, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  23. Davide Fiaschi & Andrea Mario Lavezzi, . "On the Determinants of Growth Volatility: a Nonparametric Approach," Discussion Papers 2003/25, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  24. Falk, Armin & Fehr, Ernst & Zehnder, Christian, 2005. "The Behavioral Effects of Minimum Wages," IZA Discussion Papers 1625, Institute for the Study of Labor (IZA).
  25. Lorenzo Corsini & Marco Guerrazzi, 2004. "Searching for Long Run Equilibrium Relationships in the Italian Labour Market: a Cointegrated VAR Approach," Discussion Papers 2004/43, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  26. Tommaso Luzzati & Alessandro Franco, 2004. "Idrogeno, fonti rinnovabili ed eco-efficienza. Quale approccio alla questione energetica?," Discussion Papers 2004/45, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  27. Bertola, Giuseppe, 1996. "Factor shares in OLG models of growth," European Economic Review, Elsevier, vol. 40(8), pages 1541-1560, November.
  28. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151.
  29. Irmen, Andreas & Wigger, Berthold, 2002. "National Minimum Wages, Capital Mobility and Global Economic Growth," CEPR Discussion Papers 3286, C.E.P.R. Discussion Papers.
  30. Kraay, Aart & Raddatz, Claudio, 2007. "Poverty traps, aid, and growth," Journal of Development Economics, Elsevier, vol. 82(2), pages 315-347, March.
  31. Lorenzo Corsini, 2006. "Firms' Entry, Imperfect Competition and Regulation," Discussion Papers 2006/57, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  32. Olivier Blanchard, 1998. "Revisiting European Unemployment: Unemployment, Capital Accumulation, and Factor Prices," NBER Working Papers 6566, National Bureau of Economic Research, Inc.
  33. Marco Guerrazzi, 2004. "Intertemporal Preferences, Distributive Shares, and Local Dynamics," Discussion Papers 2004/49, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  34. Luciano Fanti & Luca Gori, 2008. "Neoclassical Economic Growth and Lifetime Welfare in a Simple OLG Model with Unions," Discussion Papers 2008/71, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  35. Daron Acemoglu & Fabrizio Zilbotti, 1999. "Productivity Differences," NBER Working Papers 6879, National Bureau of Economic Research, Inc.
  36. Robert Shimer & Iván Werning, 2007. "Reservation Wages and Unemployment Insurance," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1145-1185, 08.
  37. Andreas Irmen & Berthold U. Wigger, 2000. "Trade Union Objectives and Economic Growth," CSEF Working Papers 34, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  38. Davide Fiaschi, 2003. "Fiscal policy and welfare in an endogenous growth model with heterogeneous endowments," Discussion Papers 2003/18, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  39. Alga Foschi, 2004. "Politiques communautaires de soutien au short sea shipping (SSS)," Discussion Papers 2004/48, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  40. Uhlig, Harald & Yanagawa, Noriyuki, 1996. "Increasing the capital income tax may lead to faster growth," European Economic Review, Elsevier, vol. 40(8), pages 1521-1540, November.
  41. Nicola Meccheri, 2003. "Performance-related-pay nel pubblico impiego: un'analisi economica," Discussion Papers 2003/3, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  42. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach," Cahiers de recherche 9406, Universite de Montreal, Departement de sciences economiques.
  43. Davide Fiaschi & Andrea Mario Lavezzi, 2003. "Nonlinear Economic Growth: Some Theory and Cross-Country Evidence," Discussion Papers 2003/14, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  44. Alga Foschi, 2004. "A cost-transit time choice model: monomodality vs. intermodality," Discussion Papers 2004/47, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  45. Robert E. Lipsey & Irving Kravis, 1982. "Do Multinational Firms Adapt Factor Proportions to Relative Factor Prices?," NBER Chapters, in: Trade and Employment in Developing Countries, Volume 2: Factor Supply and Substitution, pages 215-256 National Bureau of Economic Research, Inc.
  46. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  47. Luciano fanti & Luca Spataro, 2004. "Dynamic inefficiency, public debt and endogenous fertility," Discussion Papers 2004/38, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  48. Carlo Brambilla & Giandomenico Piluso, 2008. "Italian investment and merchant banking up to 1914: Hybridising international models and practices," Discussion Papers 2008/7, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  49. Mario Morroni, 2006. "Innovative activity, substantive uncertainty and the theory of the firm," Discussion Papers 2006/59, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  50. Alga Foschi, . "The maritime container transport structure in the mediterranean and italy," Discussion Papers 2003/24, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  51. Maurizio Lisciandra, 2007. "The Role of Reciprocating Behaviour in Contract Choice," Discussion Papers 2007/65, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  52. Claudia Goldin & Lawrence F. Katz, 2007. "Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 135-168.
  53. Luciano fanti & Luca Spataro, 2004. "Welfare implications of national debt in a OLG model with endogenous fertility," Discussion Papers 2004/35, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  54. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 477-94, July.
  55. Nicole M. Fortin & Thomas Lemieux, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring.
  56. Luciano Fanti & Luca Spataro, 2004. "Endogenous labor supply and Diamond's (1965) model: a reconsideration of the debt role," Discussion Papers 2003/22, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  57. Luciano Fanti & Luca Spataro, 2007. "Poverty traps and intergenerational transfers," Discussion Papers 2007/66, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  58. Alga Foschi, 2005. "Lo shipping, la cantieristica ed i porti nellindustria marittima," Discussion Papers 2005/53, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  59. Fabrizio Bulckaen and Marco Stampini, 2006. "Commodity Tax Reforms In A Many Consumers Economy: A Viable Decision-Making Procedure," Taxation eJournal of Tax Research , ATAX, University of New South Wales.
  60. Alga D. Foschi & Xavier Peraldi & Michel Rombaldi, 2005. "Inter-island Links in Mediterranean Short Sea Shipping Networks," Discussion Papers 2005/52, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  61. Thomas Lindh & Bo Malmberg, 1999. "Age structure effects and growth in the OECD, 1950-1990," Journal of Population Economics, Springer, vol. 12(3), pages 431-449.
  62. Corneo, Giacomo & Marquardt, Marko, 2000. "Public pensions, unemployment insurance, and growth," Journal of Public Economics, Elsevier, vol. 75(2), pages 293-311, February.
  63. Mariti Paolo, 2004. "Costi di transazione e sviluppi dell'economia d'impresa," L'industria, Società editrice il Mulino, issue 4, pages 755-782.
  64. Davide Fiaschi & Pier Mario Pacini, 2003. "Growth and coalition formation," Discussion Papers 2003/13, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  65. Marco Guerrazzi, 2005. "Notes on Continuous Dynamic Models: the Benhabib-Farmer Condition for Indeterminacy," Discussion Papers 2005/54, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  66. Luciano Fanti & Luca Gori, 2008. "Fertility and regulated wages in an OLG model of neoclassical growth: Pensions and old age support," Discussion Papers 2008/70, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  67. Mario Morroni, 2006. "Complementarities among capability, transaction and scale-scope considerations in determining organisational boundaries," Discussion Papers 2006/58, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  68. Claudia Goldin & Lawrence F. Katz, 2007. "Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing," NBER Working Papers 13568, National Bureau of Economic Research, Inc.
  69. Stefan Josten, 2006. "Dynamic fiscal policies and unemployment in a simple endogenous growth model," International Tax and Public Finance, Springer, vol. 13(6), pages 701-716, November.
  70. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, June.
  71. Giuseppe Freni & Fausto Gozzi & Neri Salvadori, 2004. "Existence of Optimal Strategies in linear Multisector Models," Discussion Papers 2004/29, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  72. Gaetano Alfredo Minerva, . "Location and Horizontal Differentiation under Duopoly with Marshallian Externalities," Discussion Papers 2003/10, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  73. Tamara Fioroni, 2006. "Life Expectancy, Health Spending and Saving," Discussion Papers 2006/62, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  74. Alga D. Foschi, 2006. "La concentrazione industriale per i sistemi di trasporto sostenibile," Discussion Papers 2006/64, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  75. Luciano Fanti & Luca Gori, 2009. "Longevity, fertility and PAYG pension systems sustainability," Discussion Papers 2009/77, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  76. Tetsuo Ono, 2007. "Unemployment dynamics in an OLG economy with public pensions," Economic Theory, Springer, vol. 33(3), pages 549-577, December.
  77. Ravn, Morten O & Sorensen, Jan Rose, 1999. " Schooling, Training, Growth and Minimum Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 441-57, September.
  78. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
  79. Gaetano Alfredo Minerva, 2004. "How Do Cost (or Demand) Asymmetries and Competitive Pressure Shape Trade Patterns and Location?," Discussion Papers 2004/40, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  80. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pie:dsedps:2009/78. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.