The minimum wage and competing ethical conceptions

Abstract

The neoclassical ethos is predicated on a goal of efficiency, which is assumed to be advanced through competitive markets where market-clearing wages are achieved when the demand for labor is exactly equal to the supply of labor. In such a market, there is no such thing as unemployment because wages either rise or fall until the demand for labor is exactly equal to the supply of labor. At the wage at which demand equals supply, all those willing and able to work at that wage will be employed. If more people are willing to work, the wage will fall further, thereby inducing firms to hire more workers, with the result being that the supply of labor once again equals the demand. Conversely, when firms are unable to hire as many workers as they would like, the wage rises to induce additional people to enter into the workforce until supply and demand are once again equal.

Citation

Levin-Waldman, O.M. (2009), "The minimum wage and competing ethical conceptions", Lewin, D. and Kaufman, B.E. (Ed.) Advances in Industrial & Labor Relations (Advances in Industrial & Labor Relations, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 181-210. https://doi.org/10.1108/S0742-6186(2009)0000016011