Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108444 
Year of Publication: 
2009
Series/Report no.: 
Budapest Working Papers on the Labour Market No. BWP - 2009/5
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Budapest
Abstract (Translated): 
In the conventional textbook demand-supply model of competitive labour markets, introduction of a minimum wage above the market-clearing level must reduce employment. Empirical findings suggest, however, that this might not always be the case, which appears to be most readily explained by monopsonistic competition in the labour market. The thought experiment reported here takes an alternative root: it interprets the phenomenon of "minimum-wage paradox" as an eventuality in a competitive labour market with friction.
Subjects: 
minimum wage and employment
minimum wage paradox
friction and search in the labour market
disequilibrium-induced alterations in demand and supply
wage rigidity
JEL: 
E20
E30
J38
ISBN: 
978-963-9796-72-0
Document Type: 
Working Paper

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