Optimal minimum wages

Abstract

"Ambitious minimum wages of 60% or more of the national mean wage are currently being debated in many countries. This column discusses the trade-off policymakers face when setting minimum wages. A quantitative spatial general equilibrium model predicts that the welfare-maximising minimum wage is higher than the employment-maximising minimum wage. Beyond 50% of the mean wage, increases in the minimum wage reduce employment at an increasing rate. Therefore, the optimal minimum wage depends on the social welfare function." (Author's abstract, IAB-Doku) ((en))

Cite article

Ahlfeldt, G., Roth, D. & Seidel, T. (2022): Optimal minimum wages. In: VOX No. 16.02.2022 London, o.Sz.