Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations

Abstract : Can public policy interfere with culture, such as beliefs and norms of cooperation? We investigate his question by evaluating the interactions between the State and the Civil Society, focusing on the labor market. International data shows a negative correlation between union density and the quality of labor relations on one hand, and state regulation of the minimum wage on the other hand. To explain this relation, we develop a model of learning of the quality of labor relations. State regulation crowds out the possibility for workers to experiment negotiation and learn about the true cooperative nature of participants in the labor market. This crowding out effect can give rise to multiple equilibria: a "good" equilibrium characterized by strong beliefs in cooperation, leading to high union density and low state regulation; and a "bad" equilibrium, characterized by distrustful labor relations, low union density and strong state regulation of the minimum wage. We then use surveys on social attitudes and unionization behavior to document the relation between minimum wage legislation and the beliefs about the scope of cooperation in the labor market.
Document type :
Preprints, Working Papers, ...
Complete list of metadata

Cited literature [39 references]  Display  Hide  Download

https://hal-sciencespo.archives-ouvertes.fr/hal-00972820
Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Thursday, April 3, 2014 - 8:06:04 PM
Last modification on : Tuesday, April 19, 2022 - 10:10:37 AM
Long-term archiving on: : Thursday, July 3, 2014 - 7:26:10 PM

File

algan-dp3680.pdf
Files produced by the author(s)

Identifiers

  • HAL Id : hal-00972820, version 1
  • SCIENCESPO : 2441/8882

Collections

Citation

Philippe Aghion, Yann Algan, Pierre Cahuc. Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations. 2008. ⟨hal-00972820⟩

Share

Metrics

Record views

146

Files downloads

277