OVERCOMING EXPLOITATION OF WAGE LABOR

Optimal Minimum Wage in Competitive Labor Markets∗

This paper presents a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. Introducing a minimum wage is desirable if the government values redistribution toward low wage workers. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations low skilled labor which is subsidized by t...

Wage Inequality in a Frictional Labor Market

Wage inequality in the United States has grown substantially in the past two decades. Standard supply-demand analysis in the empirics of inequality (e.g. Katz and Murphy (1992)) indicates that we may attribute some of this trend to an outward shift in the demand for high skilled labor. In this paper we examine a simple static channel in which the wage premium for skill may grow increased firm e...

Book Discussion Consumer Complicity and Labor Exploitation

Are consumers in high-income countries complicit in labor exploitation when they buy good produced in sweatshops? To focus attention we consider cases of labor exploitation such as those of exposing workers to very high risks of irreversible diseases, for instance, by failing to provide adequate safety equipment. If I purchase a product made under such conditions, what is my part in this exploi...

Immigration, Labor Market and Wage Inequality

Sticky Wage Models and Labor Supply Constraints∗

In New Keynesian models with sticky wages, the quantity of labor is solely determined by the demand side. Unions with monopsony power set the wage above what it takes to make agents work. If wages are sticky, however, a change of circumstances may make the demand for labor higher than agents’ willingness to work. Because of the simplicity of log-linearization, the literature implicitly assumes ...