The Economics behind the Directive on Adequate Minimum Wages in the EU: Why Differentiated Integration is a Better Option

This chapter discusses the underlying economic analysis of the Directive regarding the effects of increased minimum wages on employment and incomes for low-paid workers and the European Commission’s presumption of adverse wage developments for the low paid in the Union. It concludes that the Commission’s analysis leaves a great deal to be desired, and also argues that a more differentiated approach to minimum wage setting would have been the better option. Differentiated integration would have more adequately accounted for the fact that the Nordic Member States follow very specific models regarding their labour markets.