Abstract
This article demonstrates that minimum wage laws need not induce unemployment even under the classic labor supply-and-demand paradigm. As a result, minimum wage laws can be welfare-enhancing under the basic labor supply and demand model, suggesting the presence of an optimal minimum wage. We discuss conditions under which the optimal minimum wage level is the subsistence wage level. As a consequence, minimum wages should vary across states or countries with the local subsistence levels.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 481-495 |
| Number of pages | 15 |
| Journal | Journal of Poverty |
| Volume | 12 |
| Issue number | 4 |
| DOIs | |
| State | Published - 2008 |
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Keywords
- Minimum wage
- Unemployment
- Wage regulation
ASJC Scopus subject areas
- Demography
- Sociology and Political Science
Cite this
Optimal minimum wage in the classic labor supply-and-demand paradigm. / Dehejia, Rajeev; Jorgensen, Bjorn N.; Thomadsen, Raphael C.
In: Journal of Poverty, Vol. 12, No. 4, 2008, p. 481-495.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Optimal minimum wage in the classic labor supply-and-demand paradigm
AU - Dehejia, Rajeev
AU - Jorgensen, Bjorn N.
AU - Thomadsen, Raphael C.
PY - 2008
Y1 - 2008
N2 - This article demonstrates that minimum wage laws need not induce unemployment even under the classic labor supply-and-demand paradigm. As a result, minimum wage laws can be welfare-enhancing under the basic labor supply and demand model, suggesting the presence of an optimal minimum wage. We discuss conditions under which the optimal minimum wage level is the subsistence wage level. As a consequence, minimum wages should vary across states or countries with the local subsistence levels.
AB - This article demonstrates that minimum wage laws need not induce unemployment even under the classic labor supply-and-demand paradigm. As a result, minimum wage laws can be welfare-enhancing under the basic labor supply and demand model, suggesting the presence of an optimal minimum wage. We discuss conditions under which the optimal minimum wage level is the subsistence wage level. As a consequence, minimum wages should vary across states or countries with the local subsistence levels.
KW - Minimum wage
KW - Unemployment
KW - Wage regulation
UR - http://www.scopus.com/inward/record.url?scp=67549144920&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=67549144920&partnerID=8YFLogxK
U2 - 10.1080/10875540802350153
DO - 10.1080/10875540802350153
M3 - Article
VL - 12
SP - 481
EP - 495
JO - Journal of Poverty
JF - Journal of Poverty
SN - 1087-5549
IS - 4
ER -