Conclusions

Christian Ragacs

Chapter 8 in Minimum Wages and Employment, 2004, pp 136-144 from Palgrave Macmillan

Abstract: Abstract This book focuses on the effects of minimum wages on employment and on steady state economic growth. For our point of view it is not significant whether the minimum wage has been introduced by law or is the result of wage negotiations between firms and unions that follow a “right to manage” behavior. In “right to manage” models, the union and the firm only negotiate the wage. Once the wage is fixed, firms unilaterally determine employment. Possible bargaining results are therefore restricted to combinations of wage and employment levels that conform to the standard labor demand function of the firm (i.e. points on its labor demand curve). This situation seems to describe the behavior of unions in the majority of bargaining procedures in advanced countries. The interpretation of results of “right to manage” negotiations as a minimum wage gives rise to the possibility of a generally stronger economic impact of the minimum wage, as only legal minimum wages would do.

Keywords: Minimum Wage; Market Failure; Employment Effect; Human Capital Accumulation; Labor Demand Curve (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-59627-6_8

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DOI: 10.1057/9780230596276_8

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