Increasing the minimum wage is positive for employment when wages are abnormally low

Studies conducted on data from labour market areas in the Untied States 1 confirm that: When the concentration of employers is high and when employers have a dominant position, a monopsony power , in the labour market , then in this situation where real wages are low relative to productivity, a rise in the minimum wage increases employment, as the income effects ( effects of demand for goods and services) and the labour supply effects outweigh the effects of labour demand; Conversely, when the concentration of employers is low in a situation where real wages are high relative to productivity, a rise in the real wage reduces employment, as the effect of labour demand prevails . If we extrapolate these results to the macroeconomic situations in OECD countries, the minimum wage should be increased in countries where real wages have risen less than labour productivity (United States, Spain, Japan, Australia) and the minimum wage (or low wages) should be reduced in countries where real wage s have risen more than labour productivity (Germany in the recent period, France, Italy). J. Azar, E. Huet-Vaughn, I. Marinescu, B. Taska, T. von Wachter (2019), “Minimum Wage Employment Effects and Labor Market Concentration”, NBER working paper no. 26101, July.