Do Minimum Wages Raise the NAIRU?

Peter Tulip

The B.E. Journal of Macroeconomics, 2004, vol. 4, issue 1, 36

Abstract: Maybe a lot. The ratio of the minimum wage to the average wage enters a Phillips-curve equation with a coefficient that is highly significant, stable, and robust. One interpretation of these results is that the relative level of the minimum wage affects the Non-Accelerating Inflation Rate of Unemployment or NAIRU. My estimates are consistent with the reduction in the relative level of the minimum wage since 1980 lowering the U.S. NAIRU about 11/2 percentage points, while raising the NAIRU in continental Europe. However, other interpretations are also possible.

Keywords: NAIRU; minimum wage (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (1)

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DOI: 10.2202/1534-5998.1163

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