The Endogenous Determination of Minimum Wage

Gil Epstein and Shmuel Nitzan

No 2319, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this paper we study the endogenous determination of minimum wage employing a political-economic game-theoretic approach. A major objective of the paper is to clarify the crucial role of the strength of the workers' union and of political culture on the determination of the minimum wage. In general, the equilibrium minimum wage differs from that postulated in the literature. In our uncertain environment the optimal minimum wage from the workers' union point of view is lower than the level that maximizes its objective function in a certain environment where there is no opposition to the proposed minimum wage. We establish that a political culture that assigns a positive weight to the public wellbeing can give rise to a wage that equals or exceeds these levels.

Keywords: Endogenous Determination; Minimum Wage; Political Culture; Public Policy (search for similar items in EconPapers)
JEL-codes: J30 J38 J50 (search for similar items in EconPapers)
Date: 1999-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2319 (application/pdf)

Related works:
Working Paper: The Endogenous Determination of Minimum Wage (1999)
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:cpr:ceprdp:2319

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=2319

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().