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Devising Minimum Wages in Emerging Markets

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John T. Addison is a Professor of Economic Theory at University of South Carolina.
David Neumark is a Professor of Economics at University of California, Irvine.

Given the confusion about the pros and cons of minimum wages in advanced economies, let alone in emerging markets (see previous blog), what types of information should policy makers be armed with? In this blog, we speak with two experts on the topic – John T. Addison (Professor of Economic Theory, University of South Carolina) and David Neumark (Professor of Economics, University of California, Irvine) – both of whom stress the importance of weighing the trade-offs for their own countries, along with pinpointing who will be the winners and losers.

Raising awareness about Wisconsin's minimum wage, Milwaukee, August 1, 2012. Photo: Flickr/wisconsinjobsnow (Wisconsin Jobs Now)

Addison adds that policy makers should be prepared to consider a multi-tiered system – which might mean a lower minimum wage for teenagers than for adults and for least-skilled workers. He also notes that the declining role of trade unions, which many people associate with higher inequality, serves as a rationale for some to advocate minimum wages as a way to buttress collective bargaining.

In our next blog, Professor Shi Li (Beijing Normal University) examines how China is faring with its minimum wage. (For more on this topic, see the Jobs Group’s Google Hangout on the topic organized by the Hong Kong University of Science and Technology Institute for Emerging Market Studies.)

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