TY  - RPRT
        AU  - Danziger, Leif
        TI  - Endogenous Monopsony and the Perverse Effect of the Minimum Wage in Small Firms
        PY  - 2009/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 4320
        UR  - https://www.iza.org/publications/dp4320
        AB  - The minimum wage rate has been introduced in many countries as a means of alleviating the poverty of the working poor. This paper shows, however, that an imperfectly enforced minimum wage rate causes small firms to face an upward-sloping labor supply schedule. Since this turns these firms into endogenous monopsonists, the minimum wage rate has the perverse effect of reducing employment in small firms as well as what these firms offer their workers. Thus, if there are only small firms, the minimum wage rate makes all workers that would be employed in the absence of a minimum wage rate worse off.
        KW  - noncompliance
KW  - minimum wage
KW  - endogenous monopsony
KW  - small firms
        ER  -