A BEJM Topics article.

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.

Submitted: September 10, 2003 · Accepted: January 8, 2004 · Published: April 1, 2004

Originally published in Topics in Macroeconomics.

Recommended Citation

Tulip, Peter (2004) "Do Minimum Wages Raise the NAIRU?," Topics in Macroeconomics: Vol. 4 : Iss. 1, Article 7.
Available at: http://www.bepress.com/bejm/topics/vol4/iss1/art7