National Minimum Wages, Capital Mobility and Global Economic Growth

Andreas Irmen and Berthold Wigger ()

No 3286, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: How do national minimum wages affect global economic growth? We address this question in a two-country endogenous growth model with capital mobility that emphasizes a link between wages, savings and growth. We identify the conditions on technology and national preferences that determine whether national minimum wages are a stimulus or an obstacle to growth. Technology matters because it determines the functional distribution of global income as well as output effects associated with the emergence of national unemployment due to minimum wages. Interestingly, differences in national savings propensities do not only affect the strength of the growth effect associated with minimum wages but may even determine its direction.

Keywords: Minimum wages; Endogenous technical change; Unemployment; Capital mobility (search for similar items in EconPapers)
JEL-codes: E24 F21 O41 (search for similar items in EconPapers)
Date: 2002-03
New Economics Papers: this item is included in nep-dev and nep-mac
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Citations: View citations in EconPapers (1)

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Journal Article: National minimum wages, capital mobility, and global economic growth (2006)
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