Mr. Ravi Balakrishnan, Mr. Chad Steinberg, and Mr. Murtaza H Syed
displaced workers seek jobs in this sector, it could lead to an increase in E and decrease in W.
Ambiguous effect on W and E.
From a theoretical perspective, it is far from straightforward to predict the employment and wage effects of a minimum wage. In a perfectly competitive model, the introduction of a minimum wage covering the entire workforce above the marketclearingwage unambiguously reduces employment. However, such conditions rarely hold. As Table 8 shows, the overall effect of a minimum wage depends on multiple factors, including the degree of
The coexistence of urban and rural poverty and migration to cities is studied in a dual economy model where the acquisition of skills is costly and involves migration to urban areas. In this model, both the distribution of innate abilities and the distribution of wealth matter for the migration decision, and costs of backmigration may produce an urban poverty trap if unemployment lowers household wealth below the cost of skills acquisition.
This paper develops and tests two efficiency wage models of corruption in the civil service. Under fair wage models, civil service wages are an important determinant of corruption. Under shirking models, the level of wages is of secondary importance, as potential bribes dwarf wage income. The empirical evidence points to a negative relationship between corruption and wages across developing countries. Tests as to the validity of the two different efficiency wage models are inconclusive.