Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34553
Authors: 
Danziger, Leif
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers 3150
Abstract: 
We show that, contrary to widespread belief, low-pay workers do not generally prefer that the minimum wage rate be increased until the labor demand is unitary elastic. Rather, there exists a critical value of elasticity of labor demand so that increases in the minimum wage rate make low-pay workers better off for higher elasticities, but worse off for lower elasticities. This critical value decreases with unemployment benefits and increases with workers' risk aversion. We also show that in some countries the benefits for long-term unemployed are so low that workers would probably prefer that the minimum wage rate be decreased.
Subjects: 
Elasticity of labor demand
minimum wage
Document Type: 
Working Paper

Files in This Item:
File
Size
225.13 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.