The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence

January 31, 2020

Preview Citation

Format: Chicago

Christopher S Adam, and Edward F Buffie. The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence, (USA: International Monetary Fund, 2020) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We show that a dynamic general equilibrium model with efficiency wages and endogenous capital accumulation in both the formal and (non-agricultural) informal sectors can explain the full range of confounding stylized facts associated with minimum wage laws in less developed countries.

Subject: Employment, Informal employment, Labor, Real wages, Wages

Keywords: Africa, Aggregate output, Capital stock, Employment, Employment elasticity, Employment loss, Firm size effect, Informal employment, Lighthouse effect, Math display, Minimum wage, Private sector, Production function, Real wages, Supply price, Unemployment rate, Wage premium, Wages, WP

Publication Details

Pages:

77
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/023
Stock No:

WPIEA2020023
ISBN:

9781513527888
ISSN:

1018-5941

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