Minimum wage, trade and unemployment in general equilibrium

摘要

The path-breaking work of Card and Krueger, showing that a higher minimum wage can increase employment, turned the age-old conventional wisdom on its head. This paper demonstrates that this apparently paradoxical result is perfectly plausible in a competitive general equilibrium production structure of a small open economy with a non-traded good, without recourse to monopsony, spatial heterogeneity, heterogeneity of consumers and so on, the usual theoretical drivers behind the result. Following Jones and Marjit, we build a simple general equilibrium model with production complementarity and we show that a higher minimum wage can raise aggregate employment. Expansion in the non-traded sector following a wage hike may be consistent with the overall expansion of the export sector in a multi-good framework, an unlikely outcome in a conventional two-good model which cannot accommodate with production complementarity.