Successful implementation of a statutory minimum
wage depends on context, capacity, and institutional design
Motivations for introducing a statutory minimum
wage in developing countries include reducing poverty, advancing social
justice, and accelerating growth. Attaining these goals depends on the
national context and policy choices. Institutional capacity tends to be
limited, so institutional arrangements must be adapted. Nevertheless, a
statutory minimum wage could help developing countries advance their
development objectives, even where enforcement capacity is weak and
informality is pervasive.
What are the economic implications of union wage
bargaining for workers, firms, and society?
Despite declining bargaining power, unions
continue to generate a wage premium. Some feel collective bargaining has had
its day. Politicians on both sides of the Atlantic have recently called for
the removal of bargaining rights from workers in the name of wage and
employment flexibility, yet unions often work in tandem with employers for
mutual gain based on productivity growth. If this is where the premium
originates, then firms and workers benefit. Without unions bargaining
successfully to raise worker wages, income inequality would almost certainly
be higher than it is.