Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1438: The Economics behind the Directive on Adequate Minimum Wages in the EU: A Critical Assessment

Per Skedinger ()
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Per Skedinger: Research Institute of Industrial Economics (IFN), Postal: Stockholm, Sweden, and Department of Economics and , Statistics, Linnaeus University, Växjö, Sweden,

Abstract: The European Commission’s Directive on minimum wages aims to ensure an adequate minimum wage for all workers in the Union and thereby counteract poverty among the low paid. This article examines the underlying economic analysis on which the Directive is based. The conclusion is that job losses associated with sharply raised minimum wages are underestimated while the reduction in poverty is exaggerated, which is why the Commission should have considered other and more effective policy measures. Furthermore, wage developments for low-paid workers in the Union do not seem to be as adverse as suggested by the Commission.

Keywords: Minimum wages; European Union; Employment; Poverty

JEL-codes: J31; J38; J88; K31; K33

Language: English

21 pages, September 20, 2022

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