تصمیم گیری محل شرکت ها و دستمزدهای حداقلی

We consider the impact minimum wage laws have on firms' location choices in a new economic geography model with exogenous minimum wage constraints. The minimum wage policy has a twofold influence on the relative attractiveness of the home country, simultaneously affecting its relative cost competitiveness and its aggregate income. The end effect depends on interactions between the skilled and unskilled segments of the labor market. If workers are strongly substitutable, the effect of raising low-skilled workers income is more than compensated by a drop in their employment level. Under such circumstances, a high minimum wage policy reduces the country's attractiveness by increasing production costs and reducing aggregate demand. Aggregate demand is further reduced once adjustments in skilled wages linked to international competitive pressures are taken into account. Gadget timed out while loading

The impact of labor market institutions on macroeconomic performance has long been at the heart of discussions in economic and political circles. The debate rages on today, especially given the increasing degree of trade and financial liberalization in the recent decades. The increasing mobility of factors of production opens new opportunities for firms to choose in which country to locate and produce. This is likely to have implications on the performance of various labor market policies. In this paper, we pay a particular attention to this dimension. We focus on minimum wage laws and ask how it affects firms' location decisions in an international setting. As noted by Dolado et al., 2000 and Dickens et al., 1999, the last two decades have shown a considerable resurgence of interest towards minimum wage policy in OECD countries.1 In general, two opposite arguments characterize the debate on the impact of minimum wage laws.

Using insights of the labor market literature and the new economic geography, the paper contributes to the debate on the effect of labor market laws on a country's attractiveness for investors. Precisely, our theoretical framework studies the link between minimum wages and firms' location choices in an international setting. We show that the impact of a minimum wage increase on the country's attractiveness is far from trivial. Firms' location decisions are affected through a negative cost effect and a possibly positive impact on aggregate demand. The originality of the paper is to explore how interactions between skilled and unskilled segments of the labor market affect firms' location patterns. In particular, we show that the direction and strength of the Home Market Effect induced by a high minimum wage depend on the substitutability between skilled and unskilled workers. When skilled wages are exogenous, a positive minimum wage shock may well benefit to the home country's attractiveness through a positive income effect. This occurs provided that skilled and unskilled workers are low substitutes. If instead substitutability is high enough, a minimum wage increase makes firms in the differentiated sector substitute unskilled for skilled workers. This substitution reduces aggregate income. In that case, the (negative) income effect strengthens the cost competitiveness loss induced by the initial minimum wage shock.