Reference : National Minimum Wages, Capital Mobility and Global Economic Growth
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Business & economic sciences : Macroeconomics & monetary economics
National Minimum Wages, Capital Mobility and Global Economic Growth
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Wigger, Berthold [> >]
C.E.P.R. Discussion Papers
[en] capital mobility; endogenous technical change; minimum wages; unemployment
[en] How do national minimum wages affect global economic growth? We address this question in a two-country endogenous growth model with capital mobility that emphasizes a link between wages, savings and growth. We identify the conditions on technology and national preferences that determine whether national minimum wages are a stimulus or an obstacle to growth. Technology matters because it determines the functional distribution of global income as well as output effects associated with the emergence of national unemployment due to minimum wages. Interestingly, differences in national savings propensities do not only affect the strength of the growth effect associated with minimum wages but may even determine its direction.
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CEPR Discussion Papers

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