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Minimum Wages, Equity and Unemployment

Published online by Cambridge University Press:  01 January 2023

J.W. Nevile
J.W. Nevile*
Affiliation:
School of Economics, The University of New South Wales
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Abstract

Increasing income inequalities in Australia increase the need to protect the incomes of low income families. It is difficult for the taxation and social security system alone to do this. Minimum wage rates have a role to play. Thus, the question of their effects on employment can not be sidestepped Traditional analysis of this question is flawed by the assumption of perfect competition and the use of particular equilibrium analysis. Labour markets have many features which distinguish them from perfectly competitive markets and feedbacks from other markets can not be ignored. Theory alone can not settle this question. A large number of empirical studies are surveyed. A widespread consensus exists that effects of minimum wage rises on adult employment are virtually non-existent A number of studies find effects on teenage employment. A number of others do not. However, even those who find statistically significant effects agree that they are small.

Type
Research Article
Information
The Economic and Labour Relations Review , Volume 7 , Issue 2 , December 1996 , pp. 198 - 212
Copyright
Copyright © The Author(s) 1996

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Footnotes

*

Trevor Stegman made helpful comments on a draft but the usual caveat applies.

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