Minimum wage: global challenges and perspectives

Produced by: 
International Policy Center for Inclusive Growth
Available from: 
June 2018
Paper author(s): 
Niky Fabiancic
Diana Sawyer
Fábio Veras Soares
Rafael Guerreiro Osorio
Sergei Soares
Macroeconomics - Economic growth - Monetary Policy

The increase in inequality over the last few decades in most of the world has been a constant source of concern for policymakers and analysts. Inequality can hinder economic growth, reduce well-being and increase poverty. It also fuels social unrest and reduces social cohesion. Great attention has been given to the role of fiscal redistribution (or lack thereof) in the inequality debate, but perhaps mechanisms that involve money passing directly from one economic agent to another, rather than through the hands of the State, deserve more attention. In a time of weakened labour unions and decreasing income mobility, can the minimum wage once again shine as a market-friendly and effective policy tool? Since its creation 124 years ago, the popularity of the minimum wage among policymakers and the public at large has risen and fallen. Most countries have introduced wage floors, but many have done so only to have their real value be eroded by inflation. A few countries have abolished minimum wages altogether (sometimes only to recreate them later). Compliance has sometimes been high and sometimes low. This issue of Policy in Focus is devoted to the minimum wage, the reasons for its existence and why now may be a good time to rethink its relationship with social policy. It features articles by leading experts and scholars on minimum wage contexts more broadly in Latin America, Europe, Asia and sub-Saharan Africa, and on more specific country contexts such as in the United States, China and France. We hope it will be a timely contribution to the timeless debate on the minimum wage and its effects worldwide, and that it will help spark further discussion.


Research section: 
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