Economics of Minimum Wages
Project summary
Stan Siebert is working with John Addison in the Dept of Economics at the Darla Moore School of Business to look at the economics of the minimum wage in the UK and US, and also in Europe, particularly Germany (where there is a new MW law) and France (which has one of the highest MWs).
Research Objectives
The MW, since it is a popular policy to raise low incomes. But here the controversy is whether the MW is too blunt a weapon, since many on low incomes are not employed, and others such as students may be in well-off families in any case. Moreover, the MW may cause labour market changes which hurt the poor in the longer term. A two-tier market can develop, with lower labour turnover amongst the more productive who retain their jobs, but only temporary jobs for the less skilled whom the employers are screening to see if they are worth employing longer-term. The French labour market, with high youth unemployment and a high proportion of temporary jobs, could be the prototypical case here. Research even shows distortion in France’s industrial structure, with too many small firms (firms choosing to remain small to avoid labour laws). Hence, analysis of the MW can help understanding of the big picture of labour market regulation.
Research Outputs
Stan visited South Carolina in November, and gave a paper surveying UK research at the Southern Economic Association meetings (November 2017), and met German and French experts. John Addison returned the visit in December to build on his knowledge of the US evidence on minimum wages and alternative policies such as tax credits for working.
Research Team
- Prof John Addison, Darla Moore School of Business, University of South Carolina-Columbia
- W S Siebert, Dept of Business, UoB
Partner organisations and sponsors
University of Birmingham travel grants
Further information
'Minimum Wages in Europe' event at Southern Economic Association