A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market

Eliav Danziger and Leif Danziger

No 10997, CESifo Working Paper Series from CESifo

Abstract: This paper explores how a minimum wage affects a firm’s behavior with a competitive labor market and an uncertain export cost. The model provides several novel insights which are consistent with recent empirical evidence. Thus, a minimum wage increases an exporter’s foreign-market size and may cause a non-exporter to start exporting. The foreign-market size may increase so much that, although the home-market size decreases, the overall firm size increases.

Keywords: minimum wage; exports; firm size (search for similar items in EconPapers)
JEL-codes: J30 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-int, nep-inv and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10997

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