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Do Minimum Wages Raise the NAIRU?
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Peter Tulip
Published/Copyright:
April 1, 2004
Abstract
Maybe a lot. The ratio of the minimum wage to the average wage enters a Phillips-curve equation with a coefficient that is highly significant, stable, and robust. One interpretation of these results is that the relative level of the minimum wage affects the Non-Accelerating Inflation Rate of Unemployment or NAIRU. My estimates are consistent with the reduction in the relative level of the minimum wage since 1980 lowering the U.S. NAIRU about 1½ percentage points, while raising the NAIRU in continental Europe. However, other interpretations are also possible.
Keywords: NAIRU; minimum wage
Published Online: 2004-04-01
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Price Stability and Monetary Policy Effectiveness when Nominal Interest Rates are Bounded at Zero
- Contributions Article
- Aggregate Price Changes and Dispersion: A Comparison of the Equity and Goods and Services Markets
- Dissemination of Technology in Market and Planned Economies
- Interest-Rate Smoothing: Monetary Policy Inertia or Unobserved Variables?
- Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution
- What Does It Take to Explain Procyclical Productivity?
- Endogenous Distribution, Politics, and the Growth-Equity Tradeoff
- Explaining Speculative Expansions
- Tariffs, Entry Regulation and Markups: Country Size Matters
- Schumpeterian Growth, North-South Trade and Wage Rigidity
- Do Federal Reserve Policy Surprises Reveal Superior Information about the Economy?
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