Quantifying Goodwin Growth Cycles with Minimum Wage Shares

Hiroaki Sasaki and Yasukuni Asada

MPRA Paper from University Library of Munich, Germany

Abstract: This study extends Goodwin's (1967) growth cycle model to consider two types of workers, low- and high-skilled workers. Using Japanese data from 1989 to 2018, we theoretically and empirically investigate how the introduction of the minimum wage share affects the wage shares and employment rates. Introducing the minimum wage share diminishes the amplitude of fluctuations of both the wage shares and the employment rates, and in this sense, it has a stabilizing effect. Reducing the wage gap between low- and high-skilled workers increases the amplitude of fluctuations of the wage shares and employment rates.

Keywords: growth cycles; low-skilled and high-skilled workers; minimum wage share (search for similar items in EconPapers)
JEL-codes: E11 E24 E25 E32 J31 (search for similar items in EconPapers)
Date: 2020-04-28
New Economics Papers: this item is included in nep-gro, nep-lma, nep-mac and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99926

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