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

78 Pages Posted: 28 Feb 2020

See all articles by Christopher Adam

Christopher Adam

University of Oxford

Edward F. Buffie

Indiana University Bloomington - Department of Economics

Date Written: January 2020

Abstract

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.

Keywords: Real sector, Price indexes, Employment, Labor market characteristics, Human capital, climate economics, disaster risk, macro feedbacks, multi-phase macro model, monetary and financial policies, environmental economics, WP, formal sector, cost share, employment loss, empirical estimate, LDCs

JEL Classification: E24, J08, J23, E01, E2, J3, D4, C43

Suggested Citation

Adam, Christopher and Buffie, Edward F., The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence (January 2020). IMF Working Paper No. 20/23. Available at SSRN: https://ssrn.com/abstract=3545289

Christopher Adam (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Edward F. Buffie

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall 105
107 S. Indiana Avenue
Bloomington, IN 47405-7000
United States
812-855-4848 (Phone)

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