Wage Distribution and Unemployment: The French Experience

• Published in: The American economic review Vol. 84; no. 2; pp. 59 - 64
• Main Author: Fitoussi, Jean-Paul
• Format: Journal Article
• Language: English
• Published: Menasha, Wis American Economic Association 01-05-1994
• Subjects: Comparative analysis; Economic theory; Economics; Economics and Finance; Employment; France; Government subsidies; Humanities and Social Sciences; Income distribution; Income inequality; Labor demand; Labor legislation; Labor market; Labor markets; Labour market; Minimum wage; Raising the Employment and Pay of the Working Poor; Real wages; Studies; Subsidies; Unemployment; Wages; Wages & salaries; United Kingdom > UK; France; United States > US
• ISSN: 0002-8282; 1944-7981

The increase in unemployment in Europe is often traced, at least partially, to the existence of some rigidities in the labor market. It is common wisdom that wage inflexibility and labor-market institutions increase the cost in terms of unemployment of adapting to shocks. In particular, minimum-wage legislation is seen to have an important responsibility in countries where it is binding. Such legislation may have at least 2, non-mutually-exclusive, effects. It may prevent wage distribution from adjusting, counteracting an increase in wage inequality, and it may lead to mounting unemployment in the low-skill segment of the labor market. These implications are tested by comparing the evolution of wage distribution and unemployment structure in France, the US, and the UK for the last 15-20 years.