Lower pay - a better world?

Claus Schäfer
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Claus Schäfer: WSI

Transfer: European Review of Labour and Research, 2000, vol. 6, issue 4, 687-716

Abstract: This article considers the clam that low wages or a greater degree of wage differentiation is a way to achieve higher employment and other desired outcomes. The empirical evidence for both Germany and the USA indicates that this is not the case. Taking Germany as an example, it is shown, among other things, that no 'employment miracle'has occurred even though wage differentials have increased in many forms, including within full-time work. The example of the USA illustrates very well that highly differentiated wages, in the context of a very unequal distribution of income, can even cause economic damage in the longer run - not to mention the social harm it inflicts. Thus the empirical evidence suggests that, on the contrary, flat income hierarchies are conducive to economic efficiency.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:sae:treure:v:6:y:2000:i:4:p:687-716

DOI: 10.1177/102425890000600410

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