Work

Analyzing the Effects of Minimum Wages: A Microeconomic Approach

Year: 2017

Type: article

Abstract: We use a microeconomic approach to analyze the effects of minimum wages. Agents are allowed to have different productivities at different principals as well as different costs of working. We obtain several new and interesting effects. Minimum wages could influence the generated surplus when leaving employment unaffected, and destroy jobs that generate relatively high levels of surplus when affecting employment. Furthermore, minimum wages could harm agents even if these stay employed, while principals could benefit from them. We provide a complete characterization of the effects and show that these hold independently of the specific bargaining procedure and information structure.

Source: Economic Theory

DOI: 10.1007/s00199-024-01607-3

Authors: Clemens Thielen, Philipp Weinschenk

Institutions: Technical University of Munich, University of Kaiserslautern, Rheinland-Pfälzische Technische Universität Kaiserslautern-Landau

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty

Open Access status: hybrid

Estimated APC paid: $3,090