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The Macroeconomic Effects of the Wage Gap between Regular and Non-Regular Employment and Minimum Wages

Hiroaki Sasaki, Jun Matsuyama and Kazumitsu Sako

Discussion papers from Graduate School of Economics Project Center, Kyoto University

Abstract: We analyze the effect of the wage gap between regular and non-regular employment on a macroeconomy by using a Keynesian dynamic model. If the steady state equilibrium exhibits the stagnationist regime, the size of the reserve army effect affects the stability of the equilibrium. On the other hand, if the steady state equilibrium exhibits the exhilarationist regime, an increase in the wage gap destabilizes the equilibrium. The introduction of the minimum wage is desirable in that it mitigates fluctuations of business cycles. However, the introduction of an inappropriate minimum wage policy leads to the real wage and employment rate that are lower than the steady state values.

Keywords: wage gap; regular and non-regular employment; minimum wage; demandled growth model (search for similar items in EconPapers)
JEL-codes: E12 E24 E25 E32 J31 J83 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-05
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Related works:
Journal Article: The macroeconomic effects of the wage gap between regular and non-regular employment and of minimum wages (2013) Downloads
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