Setting the minimum wage

Tito Boeri

Labour Economics, 2012, vol. 19, issue 3, 281-290

Abstract: The process leading to the setting of the minimum wage so far has been overlooked by economists. There are two common ways of setting national minimum wages: they are either government legislated or the byproduct of collective bargaining agreements, which are extended erga omnes to all workers. We develop a simple model relating the level of the minimum wage to the setting regime. Next, we exploit a new data set on minimum wages in 68 countries having a statutory national minimum level of pay in the period 1981–2005. We find that a Government legislated minimum wage is lower than a wage floor set within collective agreements. This effect survives to several robustness checks and can be interpreted as a causal effect of the setting regime on the level of the minimum wage.

Keywords: Minimum wages; Collective bargaining; Statutory minimum (search for similar items in EconPapers)
JEL-codes: J31 J41 J42 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

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Working Paper: Setting the Minimum Wage (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:19:y:2012:i:3:p:281-290

DOI: 10.1016/j.labeco.2012.01.001

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