How do you know that real wages are too high?
Manning, A.
(1995).
How do you know that real wages are too high?
Quarterly Journal of Economics,
110(4), 1111-1125.
https://doi.org/10.2307/2946650
(1995).
How do you know that real wages are too high?
Quarterly Journal of Economics,
110(4), 1111-1125.
https://doi.org/10.2307/2946650
It is a common belief that the existence of involuntary unemployment implies that wages are too high and that wage moderation should be encouraged as a way to keep unemployment down. This paper argues for a reconsideration of this view by showing that it is possible for a binding minimum wage to reduce unemployment or increase employment even if there is involuntary unemployment.