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Deakin, Simon; Wilkinson, Frank --- "Minimum Wage Legislation" [2009] ELECD 407; in Dau-Schmidt, G. Kenneth; Harris, D. Seth; Lobel, Orly (eds), "Labor and Employment Law and Economics" (Edward Elgar Publishing, 2009)

Book Title: Labor and Employment Law and Economics

Editor(s): Dau-Schmidt, G. Kenneth; Harris, D. Seth; Lobel, Orly

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847207296

Section: Chapter 5

Section Title: Minimum Wage Legislation

Author(s): Deakin, Simon; Wilkinson, Frank

Number of pages: 22

Extract:

5 Minimum wage legislation
Simon Deakin and Frank Wilkinson


1 Introduction
Most countries, developed and developing, set a legal minimum level
to wages either through statute or by giving legal force to the terms of
collective agreements negotiated between employers and trade unions.
Neoclassical economics, however, is hostile to minimum wage legislation
and to labour standards more generally, seeing them as an unwarranted
interference with the operation of the market and a cause of unemploy-
ment. In the early 1990s some striking empirical evidence from the USA
and the UK showed that employment rose when minimum wage laws
are introduced (Card and Krueger 1995) and fell when such laws were
repealed (Dickens et al. 1993). Since then the implementation of a statutory
national minimum wage in Britain has been achieved without significant
disemployment effects (Metcalf 2007). Although it is now widely accepted
that empirical evidence has cast doubt on the orthodox economic critique
of the minimum wage, there is less consensus on what it might mean for
economic theory or for the understanding of how the legal system affects
the workings of the labour market.
This chapter will begin by briefly reviewing types of minimum wage
legislation before looking at the standard neoclassical critique of the
minimum wage. The recent empirical evidence is then examined and con-
sideration is given to its implications for theory. Then the focus shifts to
two practical issues arising from the contemporary practice of minimum
wage regulation: the dynamic effects associated with introducing and
raising ...