Do minimum wages stimulate productivity and growth? : minimum wage increases fail to stimulate growth and can have a negative impact on vulnerable workers during recessions

Joseph J. Sabia (San Diego State University, USA, and IZA, Germany)

Proponents of minimum wage increases have argued that such hikes can serve as an engine of economic growth and assist low-skilled individuals during downturns in the business cycle. However, a review of the literature provides little empirical support for these claims. Minimum wage increases redistribute gross domestic product away from lower-skilled industries and toward higher-skilled industries and are largely ineffective in assisting the poor during both peaks and troughs in the business cycle. Minimum wage-induced reductions in employment are found to be larger during economic recessions.

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Year of publication:	December 2015
Authors:	Sabia, Joseph J.
Publisher:	Bonn : Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)
Subject:	minimum wages \| business cycle \| productivity \| poverty \| Mindestlohn \| Minimum wage \| Konjunktur \| Business cycle \| Armut \| Poverty \| Produktivität \| Productivity \| Wirkungsanalyse \| Impact assessment \| Arbeitsproduktivität \| Labour productivity \| Wirtschaftswachstum \| Economic growth \| Beschäftigungseffekt \| Employment effect \| Theorie \| Theory

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