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Title: | The Optimal Minimum Wage with Regulatory Uncertainty |
Authors: | Chioveanu, I Bennett, J |
Keywords: | minimum wage;uncertainty;worker surplus |
Issue Date: | 2017 |
Citation: | Journal of Public Economic Theory |
Abstract: | For two di¤erent regulatory standards, we examine the optimal minimum wage in a competitive labour market when the government is uncertain about supply and demand. Solutions are related to underlying supply and demand conditions, and to the extent of uncertainty and of rationing e¢ ciency. With expected earnings-maximization, greater uncertainty widens the range of parameter values for which a minimum wage should be set. With expected worker surplus-maximization and su¢ ciently e¢ cient rationing, a minimum wage should always be set. However, in both cases regulatory uncertainty may require a low minimum wage that may not bind in equilibrium. |
URI: | http://bura.brunel.ac.uk/handle/2438/15157 |
ISSN: | 1467-9779 |
Appears in Collections: | Dept of Economics and Finance Research Papers |
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