The economic effects of the minimum wage
Economic Note / June 2008
In France, concerns about household purchasing power have revitalised the debate on how high the minimum wage (known as the SMIC) should be set. After an initial increase of 2.3% on 1 May, the minimum wage is to be raised again on 1 July by 0.9%.
Although raising the SMIC may look like a way of increasing the purchasing power of the lowest-paid workers, the very existence of a minimum wage is highly damaging to them. With its effects on unemployment levels and pay rates for wage earners, it is actually a dubious concept.