International Minimum Wage Levels

Statistics on different international minimum wage levels from the OECD.

Minimum wage levels indicate how different countries have pursued alternative policies for labour markets.

Minimum wages
Minimum wages in selected countries

The most generous minimum wage levels are in Western Europe. US has a relatively low minimum wage

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It is not surprising to find France has one of most generous minimum wages relative to average full time wages. A minimum wage which is over 60% average wages. By contrast the US has one of the lowest minimum wages, just 37% of average wages.

This reflects different approaches to government intervention in the labour market. The US tends to tolerate greater levels of income inequality. There is greater stress placed on free market economics and allow firms greater wage flexibility. It is argued a cost of raising minimum wages would be higher unemployment.

The theory of monopsonistic markets suggest that firms can pay lower wages without causing unemployment. This justifies higher minimum wages which seek to reduce wage inequality.

A key issue in setting minimum wages is at what level does it start to cause unemployment. Empirical evidence is mixed. Until the 2000s, the US and Japan had relatively lower unemployment, but there are so many factors causing unemployment it is too simplistic to put this on a lower minimum wage. Also since recession of 2008, US unemployment has caught up with European averages.

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Further Reading on Minimum Wages

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By on August 19th, 2011

3 thoughts on “International Minimum Wage Levels

  1. Thank you for the article of very interesting and relevant information. My question goes the other direction, if we control policy with a minimum wage where is the maximum wage? If the feds can tailor the pants cuff anytime they want to, why not tailor the collar as well.What is good for the rest of us should be good enough for them. A maximum wage will create more dividends for shareholders and will thereby stimulate econnomic growth needed.

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