In a laboratory experiment we show that minimum wages have significant and lasting effects on subjects' reservation wages. The temporary introduction of a minimum wage leads to a rise in subjects' reservation wages which persists even after the minimum wage has been removed. Firms are therefore forced to pay higher wages after the removal of the minimum wage than before its introduction. As a c...

In view of rising wage inequality and increasing poverty, the introduction of a legal minimum wage has recently become an important policy issue in Germany. We analyze the distributional effects of the introduction of a nationwide legal minimum wage of € 7.5 per hour on the basis of a microsimulation model which accounts for the complex interactions between individual wages, the tax-benefit sys...

The paper analyses the links between a binding minimum wage and union bargaining. A dual labour market model is developed where the rst sector outcome is characterised by bargaining between unions and rms, while in the second sector rms have to pay a statutory minimum wage. It is shown that a minimum wage increase has negative employment e ects only if the bargaining outcome is described by the...

Disagreements among economists rarely breach the academy’s walls. The recent minimum-wage controversy is a significant exception. At first glance, all the sound and fury is a puzzle.1 Minimum-wage effects, at least for current U.S. magnitudes, are small potatoes.2 Of several more important policy concerns—entitlement reform, health insurance, CPI calculation, for example—none has generated anyt...

The prevailing labor market models assume that minimum wages do not affect the labor supply schedule. We challenge this view in this paper by showing experimentally that minimum wages have significant and lasting effects on subjects’ reservation wages. The temporary introduction of a minimum wage leads to a rise in subjects’ reservation wages which persists even after the minimum wage has been ...

This paper surveys issues associated with the minimum wage and its economic impacts in Japan. First, I discuss how the minimum wage is discussed in recent political debates. Next, I explain economic factors surrounding the Japanese labor market that are related to the minimum wage: specifically, I take up the issues of globalization and “mismatch” (i.e., a labor shortage exists in some industri...

This paper investigates the possibility that the imposition of a minimum wage increases employment in the affected sector, measured in terms of hours of work, and lowers product prices. Unlike related prior theoretical research, I consider a neoclassical perfect information economy. Both labor and product markets are assumed to be perfectly competitive. Workers choose the number of hours of wor...

This paper revisits labor market effects of the minimum wage by taking advantage of a unique institutional setting and rich data from Russia covering 89 regions over 10 years, from 2001 to 2010. Our empirical analysis draws on the methodology introduced by Neumark and Wascher, in which labor market outcomes at the regional level are related to the relative minimum wage (captured by the Kaitz in...