Do minimum wages stimulate productivity and growth?

Joseph J. Sabia
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Joseph J. Sabia: San Diego State University, USA, and IZA, Germany

IZA World of Labor, 2015, No 221, 221

Abstract: Proponents of minimum wage increases have argued that such hikes can serve as an engine of economic growth and assist low-skilled individuals during downturns in the business cycle. However, a review of the literature provides little empirical support for these claims. Minimum wage increases redistribute gross domestic product away from lower-skilled industries and toward higher-skilled industries and are largely ineffective in assisting the poor during both peaks and troughs in the business cycle. Minimum wage-induced reductions in employment are found to be larger during economic recessions.

Keywords: minimum wages; business cycle; productivity; poverty (search for similar items in EconPapers)
JEL-codes: J31 J38 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (9)

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