International Analysis of the Minimum Wages Based on a Model of Human Capital

Abstract

The aim of the study is to identify the factors and examine their impact on the minimum wages. The basis for the studies and research is the theory of measuring human capital of workers. The minimum wages models result from this theory. According to the theory of measuring human capital, it is assumed that minimum wages should compensate for the diffusion of the workers’ human capital as a result of performed by them work. They should therefore be consistent with the value of the work performed. Based on the model of human capital the minimum wages were estimated for sample countries, taking into account the duration of compulsory schooling and maintenance costs in these countries. Selected countries were those with the official minimum wage regulations. The analysis took into account in particular the studies of labor productivity. The labor productivity is in fact the primary factor that allows establishment of the minimum wages at the right level. In addition, the minimum wages were analysed in relation to the factors such as inflation rates and unemployment rates by calculating the correlation coefficients and using statistical linear regression. From the calculations, an equation was derived describing the model monthly minimum wages. The results of the research relate partly to the amount of minimum wages as set by the legislations. The paper analysed the official minimum wages in the sample countries and assessed them by comparison with the model wages.