The Effect of Minimum Wage Legislation on Income Equality: A TheoreticalAnalysis / J. Huston McCulloch.

Format:

Book

Author/Creator:

McCulloch, J. Huston.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0171.

NBER working paper series no. w0171

Language:

English

Subjects (All):

Income distribution--Mathematical models.

Income distribution.

Minimum wage--Law and legislation--United States.

Minimum wage.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Effect of Minimum Wage Legislation on Income Equality

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1977.

Cambridge, Mass. : National Bureau of Economic Research, 1977.

Summary:

Minimum wage legislation is frequently advocated in the belief that itcreates a more nearly equal distribution of income. A one-sector model of general equilibrium is used to analyze a universally applicable minimum wage, and a two-sector model is used to analyze a minimum wage that is only applied to certain industries. In both cases we find that a minimum wage may well lower equality (as computed by the Gini index) if we consider reasonable values for the parameters of these two models. In the absence of unemployment compensation, equality can increase only if the elasticity of substitution in production is quite low. In the one-sector case, however, equality necessarily rises if unemployment compensation is present and sufficiently generous.

Notes:

Print version record

March 1977.