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The ambiguous effect of minimum wages on hours

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  • Eric Strobl
  • Frank Walsh

Abstract

In a competitive model we ease the assumption that efficiency units of labour are the product of hours and workers. We show that a minimum wage may either increase or decrease hours per worker and the change will have the opposite sign to the slope of the equilibrium hours hourly wage locus. Similarly, total hours worked may rise or fall. We illustrate the results throughout with a Cobb-Douglas example.

Suggested Citation

  • Eric Strobl & Frank Walsh, 2011. "The ambiguous effect of minimum wages on hours," Open Access publications 10197/8051, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:oapubs:10197/8051
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    File URL: http://hdl.handle.net/10197/8051
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    References listed on IDEAS

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    1. Frank Walsh, 2003. "Comment on 'minimum wages for ronald mcdonald monopsonies: a theory of monopsonistic competition'," Economic Journal, Royal Economic Society, vol. 113(489), pages 718-722, July.
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    17. Mark B. Stewart & Joanna K. Swaffield, 2008. "The Other Margin: Do Minimum Wages Cause Working Hours Adjustments for Low‐Wage Workers?," Economica, London School of Economics and Political Science, vol. 75(297), pages 148-167, February.
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    Citations

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    Cited by:

    1. Azar, Ofer H., 2012. "The effect of the minimum wage for tipped workers on firm strategy, employees and social welfare," Labour Economics, Elsevier, vol. 19(5), pages 748-755.
    2. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2014. "The Impact of Internal Migration on Local Labour Markets in Thailand," Working Papers hal-04141356, HAL.
    3. Strobl, Eric & Walsh, Frank, 2016. "Monopsony, minimum wages and migration," Labour Economics, Elsevier, vol. 42(C), pages 221-237.
    4. Eliav Danziger & Leif Danziger, 2018. "The Optimal Graduated Minimum Wage and Social Welfare," CESifo Working Paper Series 6943, CESifo.
    5. Eliav Danziger & Leif Danziger, 2015. "A Pareto-improving Minimum Wage," Economica, London School of Economics and Political Science, vol. 82(326), pages 236-252, April.
    6. Alexander Muravyev & Aleksey Oshchepkov, 2013. "Minimum wages and labor market outcomes: evidence from the emerging economy of Russia," HSE Working papers WP BRP 29/EC/2013, National Research University Higher School of Economics.
    7. Muravyev, Alexander & Oshchepkov, Aleksey, 2013. "Minimum Wages, Unemployment and Informality: Evidence from Panel Data on Russian Regions," IZA Discussion Papers 7878, Institute of Labor Economics (IZA).
    8. Danziger, Eliav & Danziger, Leif, 2018. "The Optimal Graduated Minimum Wage and Social Welfare," IZA Discussion Papers 11386, Institute of Labor Economics (IZA).
    9. Ham, Andrés, 2018. "The Consequences of Legal Minimum Wages in Honduras," World Development, Elsevier, vol. 102(C), pages 135-157.
    10. Danziger, Eliav & Danziger, Leif, 2018. "The Optimal Graduated Minimum Wage and Social Welfare," GLO Discussion Paper Series 188, Global Labor Organization (GLO).
    11. repec:ipg:wpaper:2014-071 is not listed on IDEAS
    12. Anna Baranowska-Rataj & Iga Magda, 2015. "The impact of the minimum wage on job separations and working hours among young people in Poland," Working Papers 75, Institute of Statistics and Demography, Warsaw School of Economics.
    13. Peng-Ju Su, Alice, 2020. "Information advantage and minimum wage," Information Economics and Policy, Elsevier, vol. 50(C).
    14. repec:ipg:wpaper:2014-069 is not listed on IDEAS

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    More about this item

    Keywords

    Minimum wages; Hours; Employment; McDonald; Ronald Monopsonies; Working hours; Legislation; Competition;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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