WHY THE MINIMAL WAGE SHOULDN’T BE ESTABLISHED ON THE MINIMUM CONSUMPTION BASKET?

Gabriela-Mariana Ionescu

Journal of Financial and Monetary Economics, 2020, vol. 8, issue 1, 45-52

Abstract: The paper examines from the point of view logical and institutional (i.e., behavioral) the concept of minimal wage regarding its establishing, functioning, and impact. The key focus is the comparison of the economic basis of establishing and adjusting of the minimal wage nominal value: on the one hand, the average nominal productivity of the employees, and, on the other hand, the (average) consumption basket. Theoretical arguments will be brought in favor of the conclusion that the minimal nominal wage must be anchored on the average nominal productivity of the employees, while its establishing on the average consumption basket transforms it into a social aid (like the minimal income). Finally, some institutional and methodological suggestions are provided in order to lead to the best choice of the macroeconomic fundamentals of establishing and periodically adjusting the minimal wage.

Keywords: minimal wage; consumption basket; income; social aid; productivity (search for similar items in EconPapers)
JEL-codes: B41 D01 H24 (search for similar items in EconPapers)
Date: 2020
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