How Do We Know That Real Wages Are Too High?

Alan Manning

The Quarterly Journal of Economics, 1995, vol. 110, issue 4, 1111-1125

Abstract: It is a common belief that the existence of involuntary unemployment implies that wages are too high and that wage moderation should be encouraged as a way to keep unemployment down. This paper argues for a reconsideration of this view by showing that it is possible for a binding minimum wage to reduce unemployment or increase employment even if there is involuntary unemployment.

Date: 1995
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Working Paper: How do we Know that Real Wages are Too High? (1994)
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