Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy



Chu, Angus C ORCID: 0000-0002-7196-1277, Kou, Zonglai and Wang, Xilin
(2020) Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy. Economics Letters, 188. p. 108943.

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Abstract

We explore the dynamic effects of minimum wage in a Schumpeterian model with endogenous market structure and obtain the following results. First, raising the minimum wage decreases the employment of low-skill workers and increases the unemployment rate. Second, it decreases the level of output. Third, it decreases the transitional growth rate of output but does not affect the steady-state growth rate. Our quantitative analysis shows that the magnitude of the negative effects of minimum wage is sharply increasing in low-skill labor intensity in production and that employed low-skill workers gain initially but might suffer from slower growth in future wages.

Item Type: Article
Uncontrolled Keywords: 8 Decent Work and Economic Growth
Depositing User: Symplectic Admin
Date Deposited: 04 Feb 2020 09:31
Last Modified: 17 Mar 2024 07:18
DOI: 10.1016/j.econlet.2020.108943
Related URLs:
URI: https://livrepository.liverpool.ac.uk/id/eprint/3073292