Working Paper: CEPR ID: DP950
Authors: Gilles Saint-Paul
Abstract: The distributional effects of the minimum wage are analysed in a model where skilled and unskilled labour enter the production function. It is argued that distributional goals are best achieved by letting the labour market clear and achieving redistribution through taxes and transfers.
Keywords: minimum wage; unemployment; labour market flexibility
JEL Codes: E6; E24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage (J38) | unemployment among unskilled workers (F66) |
| unemployment among unskilled workers (F66) | overall output (E23) |
| minimum wage (J38) | income redistribution from skilled to unskilled workers (F66) |
| minimum wage (J38) | income redistribution from the poorest to lowermiddle class (H23) |
| minimum wage (J38) | inequality in a rigid labor market (J70) |
| tax-transfer system (H87) | output and inequality (C67) |