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The Impact of Introducing a Minimum Wage on Business Cycle Volatility :, A Structural Analysis for Hong Kong SAR

Abstract
We study the impact of a minimum wage on business cycle volatility, depending upon its coverage and adjustment mechanism. As with other small open economies, Hong Kong SAR is vulnerable to external shocks, with its exchange rate regime precluding active monetary policy. Adjustment to past shocks has relied on flexible domestic prices. We find that a minimum wage affecting 20 percent of employees would amplify output volatility by 0.2 percent to 9.2 percent, and employment volatility by ?1.2 percent to 7.8 percent. A fixed wage or indexation to consumption price inflation increases volatility most. Indexation to wage inflation or unit labor cost growth is preferable, largely preserving labor market flexibility
Table Of Contents
4. Impulse Responses to a Foreign Supply Shock5. Impulse Responses to a Domestic Demand Shock; 6. Impulse Responses to a Foreign Demand Shock; 7. Impulse Responses to a Domestic Monetary Conditions Shock; V. Conclusion; 8. Impulse Responses to a Foreign Monetary Conditions Shock; Appendices; 1. Model Development, Estimation Procedure, and Estimation Results; Appendix Tables; I.1 Deterministic Steady State Equilibrium Values of Great Ratios; I.2 Parameter Estimation Results; 2. Description of the Data Set; References
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (56 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781451996333

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