MINIMUM-WAGE UNEMPLOYMENT AND GROWTH

This paper shows that, in an overlapping generations model with endoge nous growth, minimum wage legislation does not necessarily has negativ e consequences on economic performance. Such legislation can have posi tive effects on growth by inducing more human capital accumulation. Mo re precisely, a low demand for unskilled labor, induced by a minimum w age, may create an incentive for workers to accumulate human capital. Moreover, it is possible that a decrease in the minimum wage lowers th e welfare of each agent in the economy.