Can a Non-Binding Minimum Wage Reduce Wages and Employment?

Sofia Bauducco and Alexandre Janiak

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: We show that, in the large-firm search model (e.g. Cahuc et al. (2008)), a minimum wage may reduce employment even when the level of the introduced minimum wage lies below the equilibrium wage of the laisser-faire economy. The argument is based on multiple equilibria and the idea that, in a large-firm context, the representative firm may choose to overemploy workers in order to renegotiate lower wages.

Date: 2015-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bcentral.cl/documents/33528/133326/DTBC_756.pdf (application/pdf)

Related works:
Working Paper: Can a non-binding minimum wage reduce wages and employment? (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:756

Access Statistics for this paper

More papers in Working Papers Central Bank of Chile from Central Bank of Chile Contact information at EDIRC.
Bibliographic data for series maintained by Alvaro Castillo ().