Working Paper: CEPR ID: DP2452
Authors: Juan J. Dolado; Florentino Felgueroso; Juan F. Jimeno
Abstract: In order to offer a balanced assessment of the role of minimum wages in the Welfare State, seven basic questions need to be answered: (i) Why is the minimum wage a useful redistributive tool?; (ii) How binding are minimum wage floors in different countries?; (iii) To what extent do minimum wages have the adverse consequences that standard analysis predict?; (iv) Are there strong theoretical grounds underlying the revisionist results?; (v) Who supports minimum wages?; (vi) Under which conditions is the minimum wage a better tool than other policy instruments to achieve income redistribution?; and, finally, (vii) What is the overall cross-country time-series evidence regarding the employment effect of the minima? The aim in this paper is to provide an appraisal on the available evidence for each of the above-mentioned issues.
Keywords: minimum wages; employment; inequality
JEL Codes: J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage policies (J38) | employment levels (J23) |
| minimum wage laws (J38) | improved income distribution outcomes (D39) |
| minimum wages (J38) | employment outcomes (J68) |
| minimum wages + active labor market policies (J68) | employment outcomes (J68) |
| minimum wages (J38) | income redistribution (H23) |
| minimum wages (J38) | adverse effects on employment (J68) |