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The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence

Christopher S Adam and Edward F Buffie

No 2020/023, IMF Working Papers from International Monetary Fund

Abstract: We show that a dynamic general equilibrium model with efficiency wages and endogenous capital accumulation in both the formal and (non-agricultural) informal sectors can explain the full range of confounding stylized facts associated with minimum wage laws in less developed countries.

Keywords: Real sector; Price indexes; Employment; Labor market characteristics; Human capital; climate economics,disaster risk,macro feedbacks,multi-phase macro model,monetary and financial policies,environmental economics,WP,formal sector,cost share,employment loss,empirical estimate,LDCs (search for similar items in EconPapers)
Pages: 77
Date: 2020-01-31
New Economics Papers: this item is included in nep-dge
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Handle: RePEc:imf:imfwpa:2020/023