Working Papers N° 756: Can a Non-Binding Minimum Wage Reduce Wages and Employment?
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Working Papers N° 756: Can a Non-Binding Minimum Wage Reduce Wages and Employment?
Autor: Sofía Bauducco
Description
We show that, in the large - firm search model (e.g. Cahu c et al. (2008)), a minimum wage may reduce employment even when the level of the introduced minimum wage lies below the equilibrium wage of the laisser - faire economy. The argument is based on multiple equilibria and the idea that, in a large - firm context, the representative firm may choose to overemploy workers in order to renegotiate lower wages.
Working Papers N° 756: Can a Non-Binding Minimum Wage Reduce Wages and Employment?
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