santos, Manon Domingues dos; Lehmann, Etienne - In: Economics Bulletin 32 (2012) 4, pp. 2801-2807
We show that lack of commitment in the policymaking process may explain the prevalence of the minimum wage to redistribute income, despite its negative impact on unemployment. In the absence of commitment, firms anticipate the government's willingness to use a minimum wage policy to reduce the...
