Goods market desirability of minimum wages

Bibliographic Data

ID9728187
AuthorsRui Pan (0000-0002-7318-3114, Hirosaki University), Dao‐Zhi Zeng (0000-0003-3348-3574, Tohoku University, corresponding author)
Year2024
Volume91
Issue364
Pages1255-1290
Publication date2024-10-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12544
OpenAlexW4400692004
LanguageEN
References cited47

This paper presents a general equilibrium model incorporating heterogeneous firms and a perfectly competitive labour market to explore the desirability of minimum wages. We demonstrate that a low minimum wage could enhance social welfare, assuming equal weighting for all individuals. This occurs because the introduction of minimum wages has the potential to mitigate the goods market distortions arising from imperfect competition, firm heterogeneity and free entry. Additionally, we illustrate that the optimal minimum wage is positively associated with the preference intensity for differentiated products relative to the numeraire and population size, while it negatively correlates with the degree of love for variety, entry cost, and upper bound of marginal labour requirements

Competition (biology) · Econometrics · Economics · Free entry · General equilibrium theory · Imperfect · Imperfect competition · Labour economics · Microeconomics · Minimum wage · Numéraire · Perfect competition · Population · Preference · Wage · Welfare · Economics of Agriculture and Food Markets · Fiscal Policy and Economic Growth · Global trade and economics

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