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

Eliav Danziger () and Leif Danziger ()
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Eliav Danziger: Simon Fraser University
Leif Danziger: Ben Gurion University

No 16846, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: exports; minimum wage; firm size (search for similar items in EconPapers)
JEL-codes: J30 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024-03
New Economics Papers: this item is included in nep-int, nep-inv and nep-lma
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