Optimal Minimum Wage in the Classic Labor Supply-and-Demand Paradigm

Rajeev  Dehejia; Bjørn N. Jørgensen; Raphael C.  Thomadsen

doi:10.1080/10875540802350153

Optimal Minimum Wage in the Classic Labor Supply-and-Demand Paradigm

Rajeev Dehejia, Bjørn N. Jørgensen, Raphael C. Thomadsen^*

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › Research › peer-review

Abstract

This article demonstrates that minimum wage laws need not induce unemployment even under the classic labor supply-and-demand paradigm. As a result, minimum wage laws can be welfare-enhancing under the basic labor supply and demand model, suggesting the presence of an optimal minimum wage. We discuss conditions under which the optimal minimum wage level is the subsistence wage level. As a consequence, minimum wages should vary across states or countries with the local subsistence levels

Original language	English
Journal	Journal of Poverty
Volume	12
Issue number	4
Pages (from-to)	481-495
Number of pages	15
ISSN	1087-5549
DOIs	https://doi.org/10.1080/10875540802350153
Publication status	Published - 2008
Externally published	Yes

Keywords

Minimum wage
Unemployment
Wage regulation

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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Cite this

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