The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence
IMF Working Papers, January 31, 2020
Source details
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- The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence
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Bibliographic details
- Authors: Christopher S Adam, Edward F Buffie
- Published: January 31, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513527888.001
Summary
- We show that a dynamic general equilibrium model with efficiency wages and endogenous capital accumulation in both the formal and (non-agricultural) informal sectors can explain the full range of confounding stylized facts associated with minimum wage laws in less developed countries.
Core model and analytical contribution
- Model features:
- Dynamic general equilibrium framework.
- Efficiency wages.
- Endogenous capital accumulation in both the formal and (non-agricultural) informal sectors.
- Primary claim:
- The model can explain the full range of confounding stylized facts associated with minimum wage laws in less developed countries.
Subjects and keywords
- Subject: Employment, Informal employment, Labor, Real wages, Wages
- Keywords: Africa, aggregate output, capital stock, Employment, employment elasticity, employment loss, firm size effect, Informal employment, lighthouse effect, math display, minimum wage, private sector, production function, Real wages, supply price, unemployment rate, wage premium, Wages, WP
Content in this bundle
- Working Paper