Home >> Working Paper
Market, Social Actions and Minimum Wage: From the Perspective of Political Economy
Read        DownLoad
TitleMarket, Social Actions and Minimum Wage: From the Perspective of Political Economy  
AuthorYe Jingyi, Zhao Kui and Fang Min  
OrganizationSchool of Economics, Peking University 
Key WordsMinimum Wage; Social Actions; Prisoner’s Dilemma 
AbstractThe minimum wage has evolved over the history and became a widely applied institutional arrangement in the real world. Traditional economic theory believes that it undermines the interest of capitalists and reduces market efficiency, while its benefit to workers and the overall social welfare is under dispute. In a different way however, from the perspective of political economy and taking into consideration the possibility of market shutdown caused by workers’ social actions as well as the prisoner’s dilemma among capitalists, this article comes to a different conclusion. The argument is elaborated through an infinite horizon dynamic game model into which we also introduce the influencing factors including the interest disparity among the worker’s group and economic fluctuation. According to the analysis, there are chances for minimum wage to raise the welfare of both sides of the labor and the capital and achieve Pareto improvement, as long as it meets certain conditions (e.g. large income disparities between workers and capital owners, a relatively high possibility for workers to take social actions). 
Serial NumberWP754 
  • Institute of Economics, Chinese Academy of Social Sciences
  • Copyright Economic Research Journal
  • The uploaded articles by this website express the authors’ views, not necessarily the views of this website.
  • Perennial Legal Counsel: Lu Kang (Chong Guang Law Office)
  • ISSN 0577-9154 CN 11-1081/F Postal Distribution Code 2-25l (Domestic) M16 (Overseas)
  • ICP 10211437 (Beijng)
  • No.2,Yuetan Bei Xiaojie, Xicheng District, Beijing 100836, P. R. China
  • Phone/Fax: (+8610) 68034153