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The Minimum Wage Can Harm Workers by Reducing Unemployment

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  • DWIGHT R. LEE

Abstract

Economists may disagree over how much raising the minimum wage increases unemployment, though few argue that the unemployment effect is zero. According to the standard model, the less the unemployment caused by a minimum wage increase, the less the harm (or greater the good) that results. But by recognizing that minimum wage workers receive fringe benefits, I show that increasing the minimum wage may not cause any unemployment and harms workers because it doesn't. Furthermore, when there is lumpiness in providing fringe benefits, a minimum wage increase may harm workers by reducing unemployment.

Suggested Citation

  • Dwight R. Lee, 2004. "The Minimum Wage Can Harm Workers by Reducing Unemployment," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 657-666, October.
    • Handle: RePEc:tra:jlabre:v:25:y:2004:i:4:p:657-666
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Browsing Catharsis – 03.26.14
      by rhmurphy in Increasing Marginal Utility (Tom Bozzo) on 2014-03-26 17:00:53

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    Cited by:

    1. Eva Lajtkepová, 2010. "Minimum Wage and Labour Market [Minimální mzda a trh práce]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2010(1), pages 3-20.
    2. Roberto Pedace & Stephanie Rohn, 2011. "The Impact of Minimum Wages on Unemployment Duration: Estimating the Effects Using the Displaced Worker Survey," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(1), pages 57-75, January.

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