A European Minimum Wage: Implications for Poverty and Macroeconomic Imbalances

Author/Editor:

Enrica Detragiache ; Christian H Ebeke ; La-Bhus Fah Jirasavetakul ; Koralai Kirabaeva ; Davide Malacrino ; Florian Misch ; Hyun Woo Park ; Yu Shi

Publication Date:

May 22, 2020

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

A hypothetical European Minimum Wage (MW) set at 60 percent of each country’s median wage would reduce in-work poverty but have limited effects on overall poverty, as many poor households do not earn a wage near MW and higher unemployment, higher prices, and a loss of social insurance benefits may erode direct benefits. Turning to competitiveness, since the MW increase to reach the European standard would be larger in euro area countries with excessive external surpluses, the associated real appreciation should help curb existing imbalances. However, a few countries with already weak external positions would experience an undesirable real appreciation.

Series:

Working Paper No. 20/59

English

Publication Date:

May 22, 2020

ISBN/ISSN:

9781513545073/1018-5941

Stock No:

WPIEA2020059

Format:

Paper

Pages:

46

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