ifo Schnelldienst 6/2008

Minimum wage: pros and cons

Protection from low wages or job destroyer:
Pros and cons of a statutory minimum wage

Does a general minimum wage offer protection from foreign low-wage competition? Does it ensure an income above the poverty line? Or does it destroy jobs and prevent the attainment of a basic livelihood. Are there reliable empirical studies? And what can German policymakers learn from the experience of their European neighbours and the US with minimum wages? Is a guaranteed minimum income via subsidies an alternative? The Ifo Institute asked important and well-known economists in German-speaking countries to give their views. The Ifo Institute hopes to contribute to an objective discussion of the minimum wage issue with this collection of arguments for and against a minimum wage fixed by the government and that takes into account labour market theory, behavioural economics as well as the legal aspects

In addition to members of the Council of German Economic Experts, the presidents and directors of several economic institutes, contributions have also been submitted by former and current heads of important economic-policy groups as well as by internationally acclaimed economists. The contributors are:.

Bert Rürup, professor at the Technical University of Darmstadt and chair of the Council of German Economic Experts
Wolfgang Franz, president of the Center for European Economic Research (ZEW) and professor at the University of Mannheim, Beatrice Weder di Mauro, professor at the University of Mainz, and Wolfgang Wiegard, professor at the University of Regensburg, all members of the Council of German Economic Experts
Joachim Möller, professor at the University of Regensburg and director of the Institute for Labour Market and Occupational Research of the Federal Labour Agency (IAB), Nuremberg, and Marion König, IAB researcher.
Manfred J. M. Neumann, professor at the University of Bonn and former chair of the Scientific Advisory Council of the Federal Ministry for Economics and Technology (1996 to 2000)
Horst Siebert, professor at the University of Kiel, former president of the Kiel Institute for the World Economy and former member of the Council of German Economic Experts (1990 to 2003)
Klaus Schmidt, professor at the University of Munich
Dennis C. Mueller, professor at the University of Vienna
Clemens Fuest, professor at the University of Cologne and chair of the Scientific Advisory Council of the Federal Ministry of Finance
Wernhard Möschel, professor at the University of Tübingen, former chair of the Monopoly Commission (1998 to 2000) and former chair of the Scientific Advisory Council of the Federal Ministry for Economics and Technology (2000 to 2004)
Friedrich Schneider, professor at the University of Linz and chair of the Verein für Socialpolitik
Erich W. Streissler, professor at the University of Vienna
Axel Börsch-Supan, professor at the University of Mannheim and former chair of the Scientific Advisory Council of the Federal Ministry for Economics and Technology (2004 until 30 April 2008)
Thomas Straubhaar, professor at the University of Hamburg and president of the Hamburg World Economics Institute (HWWI)
Wolfgang Lechthaler, former researcher at the Kiel Institute for the World Economy, and Dennis J. Snower, professor at the University of Kiel and president of the Kiel Institute for the World Economy
Gerhard D. Kleinhenz, professor at the University of Passau and former director of the Institute for Labour Market and Occupational Research of the Federal Labour Agency (1997 to 2002), and Stefan Bauernschuster, researcher at the University of Passau
Werner Güth, professor at the University of Jena and director of the Max Planck Institute of Econmics in Jena, and Hartmut Kliemt, Frankfurt School of Finance & Management
Ernst Helmstädter, professor at the University of Kiel and former member of the German Council of Economic Experts (1983 to 1988)
Hans-Werner Sinn, professor at the University of Munich and president of the Ifo Institute, former chair of the Verein für Socialpolitik (1997 to 2000)

The 18 contributions are preceded by a joint appeal of the presidents and directors of German economic research institutes from 12 March 2008.

Since many of the authors quote a study by Joachim Ragnitz and Marcel Thum on how they calculated the possible job losses from a minimum wage which appeared in ifo Schnelldienst 1/2008, this article is also reprinted in this issue. Marcel Thum is professor at the Technical University of Dresden and head of Ifo Dresden. Joachim Ragnitz is the deputy head of the subsidiary.

ifo Schnelldienst 6/2008

Minimum wage: pros and cons

Protection from low wages or job destroyer: Pros and cons of a statutory minimum wage

Protection from low wages or job destroyer:
Pros and cons of a statutory minimum wage