The elasticity of labor demand and the optimal minimum wage
By: by Leif Danziger
Series: Discussion paper -- no. 2360; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2360
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] /
Subjects: Minimum wage; Labor demand
Description: "Contrary to widespread belief, we show that low-pay workers might not generally prefer that the minimum wage rate be increased to a level where the labor demand is unitary elastic. Rather, there exists a critical value of elasticity of labor demand such that increases in the minimum wage rate make low-pay workers better off for higher elasticities, but worse off for lower elasticities. We demonstrate that the critical value decreases with the workers' income-equivalent wage rate and increases with their risk aversion. It is also shown that there may not exist an optimal minimum wage rate, and if it does exist, may not be unique"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 12/13/2006.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.