The Optimal Minimum Wage with Regulatory Uncertainty
John Bennett () and
Ioana Chioveanu ()
No 9576, IZA Discussion Papers from Institute of Labor Economics (IZA)
For two different regulatory standards, we examine the optimal minimum wage in a competitive labour market when the government is uncertain about supply and demand. Solutions are related to underlying supply and demand conditions, and the extent of uncertainty and of rationing efficiency. We show that regulatory uncertainty does not diminish the rationale for intervention, but may require a low minimum wage that may not bind. With expected earnings-maximization, greater uncertainty widens the range of parameter values for which a minimum wage should be set. With expected worker surplus-maximization and sufficiently efficient rationing, a minimum wage should always be set.
Keywords: minimum wage; uncertainty; worker surplus (search for similar items in EconPapers)
JEL-codes: J38 J31 (search for similar items in EconPapers)
Pages: 30 pages
New Economics Papers: this item is included in nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Published in: Journal of Public Economic Theory, 2017, 19 (6), 1099-1116
Downloads: (external link)
Journal Article: The optimal minimum wage with regulatory uncertainty (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9576
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().