Dynamic Effects of Minimum Wage on Growth and Innovation in a Schumpeterian Economy

Angus Chu, Zonglai Kou and Xilin Wang

MPRA Paper from University Library of Munich, Germany

Abstract: We explore the dynamic effects of minimum wage in a Schumpeterian model with endogenous market structure and obtain the following results. First, raising the minimum wage decreases the employment of low-skill workers and increases the unemployment rate. Second, it decreases the level of output. Third, it decreases the transitional growth rate of output but does not affect the steady-state growth rate. Our quantitative analysis shows that the magnitude of the negative effects of minimum wage is sharply increasing in low-skill labor intensity in production and that employed low-skill workers gain initially but might suffer from slower growth in future wages.

Keywords: minimum wage; unemployment; innovation; endogenous market structure (search for similar items in EconPapers)
JEL-codes: E24 O3 O4 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-ino, nep-mac and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://mpra.ub.uni-muenchen.de/97975/1/MPRA_paper_97975.pdf revised version (application/pdf)

Related works:
Journal Article: Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:94822

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