The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence

This paper uses a dynamic general equilibrium model with efficiency wages and endogenous capital accumulation

From:
Foreign, Commonwealth & Development Office
Published
31 January 2020
Document Type:
Working Paper
Theme:
Economic Growth
Authors:
Adam, C, Buffie, E

Abstract

This paper shows 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.

This work is part of the ‘Macroeconomics in Low-income countries’ programme

Citation

Christopher Adam and Edward Buffie (2020) The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence. IMF Working Paper No. 20/23

The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence

Published 31 January 2020
Contents