Minimum Wage and Unemployment: An Empirical Study on OECD Countries

Gieyoung Lim () and Chong-Uk Kim
Additional contact information
Gieyoung Lim: Department of International Economics & Law, Hankuk University of Foreign Studies, 107 Imun-ro, Dongdaemun-gu, Seoul, 02450, Korea

Journal of Reviews on Global Economics, 2018, vol. 7, 1-9

Abstract: With ongoing increasing minimum wage and political debates underway, minimum wage and its impacts on the labor market are one of the most important items on policymakers’ agendas worldwide. In this paper, we attempt to explain how labor demand and supply respond to minimum wage increases. In our model, firms can hire either skilled or unskilled workers to maximize their profits. With data from 25 OECD countries over 15 years from 2000 to 2014, we find that a higher minimum wage decreases labor demand but does not affect labor supply. Our empirical results also suggest that relatively modest increases in minimum wages have limited impacts on employment. On average, 10 percent increase in the minimum wage decreases employment by 0.7 percent, thereby increasing unemployment rate by 0.64 percent.

Keywords: Minimum Wage; Unemployment; Skilled and Unskilled Labor. (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://lifescienceglobal.com/independent-journals ... -and-unskilled-labor

Related works:
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:lif:jrgelg:v:7:y:2018:p:1-9

Access Statistics for this article

Journal of Reviews on Global Economics is currently edited by Michael McAleer and Chia-Lin Chang

More articles in Journal of Reviews on Global Economics from Lifescience Global
Bibliographic data for series maintained by Faisal Ameer Khan ( this e-mail address is bad, please contact ).