We offer an analysis of the existence of a positive relationship between minimum wages and economic growth in a simple one-sector overlapping generations economy `a la Romer (J Polit Econ 94:1002–1037, 1986), in the case of both homogeneous and heterogeneous labour and without considering any growth-sustaining externalities which the minimum wage can generate. Assuming also the existence of unemployment benefits financed with balanced-budget consumption taxes not conditional upon age, we show that the minimum wage can promote economic growth and welfare despite the occurrence of unemployment. There may also exist a growth- and welfare-maximising minimum wage.
On economic growth and minimum wages
GORI, LUCA
2011-01-01
Abstract
We offer an analysis of the existence of a positive relationship between minimum wages and economic growth in a simple one-sector overlapping generations economy `a la Romer (J Polit Econ 94:1002–1037, 1986), in the case of both homogeneous and heterogeneous labour and without considering any growth-sustaining externalities which the minimum wage can generate. Assuming also the existence of unemployment benefits financed with balanced-budget consumption taxes not conditional upon age, we show that the minimum wage can promote economic growth and welfare despite the occurrence of unemployment. There may also exist a growth- and welfare-maximising minimum wage.
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
