Wage and employment effects of non-binding minimum wages
Dittrich, Marcus ;  Knabe, Andreas ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleWage and employment effects of non-binding minimum wages
AuthorDittrich, Marcus
AuthorKnabe, Andreas
InstitutionUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages22 S.
Series Discussion paper / School of Business & Economics ; 2010/15 : Economics
Keywordsminimum wage, bargaining, Kalai-Smorodinsky solution
Classification (DDC)331 Labor economics
AbstractCommon wisdom holds that the introduction of a non-binding minimum wage is irrelevant for
actual wages and employment. Empirical and experimental research, however, has shown that the
introduction of a minimum wage can raise even those wages that were already above the new
minimum wage. In this paper, we analyze how these findings can be explained by theoretical wage
bargaining models between unions and firms. While the Nash bargaining solution is unaffected by
minimum wages below initially bargained wages, we show that such minimum wages can drive up
wages – and be harmful to employment – when bargaining follows the Kalai-Smorodinsky
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Arbeitsmarkt- und Sozialpolitik
Year of publication2010
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2010-08-31 : 09:24:00
Last changed2015-01-22 : 04:40:36
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000006425