National Minimum Wages, Capital Mobility and Global Economic Growth

15 Pages Posted: 30 Apr 2002

See all articles by Andreas Irmen

Andreas Irmen

University of Luxembourg - Ceter for Research in Economic Analysis (CREA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Munich

Berthold U. Wigger

University of Mannheim - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2002

Abstract

How do national minimum wages affect global economic growth? We address this question in a two-country endogenous growth model with capital mobility that emphasizes a link between wages, savings and growth. We identify the conditions on technology and national preferences that determine whether national minimum wages are a stimulus or an obstacle to growth. Technology matters because it determines the functional distribution of global income as well as output effects associated with the emergence of national unemployment due to minimum wages. Interestingly, differences in national savings propensities do not only affect the strength of the growth effect associated with minimum wages but may even determine its direction.

Keywords: Minimum wages, endogenous technical change, unemployment, capital mobility

JEL Classification: E24, F21, O41

Suggested Citation

Irmen, Andreas and Wigger, Berthold U., National Minimum Wages, Capital Mobility and Global Economic Growth (March 2002). CEPR Discussion Paper No. 3286. Available at SSRN: https://ssrn.com/abstract=310088

Andreas Irmen (Contact Author)

University of Luxembourg - Ceter for Research in Economic Analysis (CREA) ( email )

162a, avenue de la Faïencerie
Luxembourg, L – 1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/crea/people/andreas_irmen

CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Munich

Poschinger Str. 5
Munich, DE-81679
Germany

Berthold U. Wigger

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany
+49 621 181 1797 (Phone)
+49 621 181 1794 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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