The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence
78 Pages Posted: 28 Feb 2020
Date Written: January 2020
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: Suggested Citation