Beschreibung

"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))