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On the distributional effects of minimum wages: A note

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  • Sell, Friedrich L.
  • Öllinger, Michael

Abstract

In this note, we recall that unions traditionally pursue a policy of pushing higher average wages and, at the same time, for a compression of the structure of wages and salaries, which is some sort of equity. Given the precipitous fall of union density in many, if not all, OECD countries, the actual good climate for minimum wage policy comes at no surprise. Despite the fact that unions do dislike the intervention of labor market policy to the detriment of tariff autonomy, we can show that minimum wages are capable of serving both of the above-mentioned goals of unions and also help increase the overall wage quota in the economy. Hence, It can be concluded that the unions have a double dividend when inviting policy makers to pursue a policy of minimum wages: both the average wage rate can be increased and the dispersion of wages be lowered, ceteris paribus.

Suggested Citation

  • Sell, Friedrich L. & Öllinger, Michael, 2017. "On the distributional effects of minimum wages: A note," Working Papers in Economics 2017,3, Bundeswehr University Munich, Economic Research Group.
    • Handle: RePEc:zbw:ubwwpe:20173
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    strategy of unions; wage dispersion; average and minimum wages; wage quota;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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