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Culture and the Labour Market

Siobhan Austen

Culture and the Labour Market attempts to define the meaning of culture and the nature of its possible consequences on economic processes and outcomes. In particular, the book examines alternative theoretical and empirical approaches to the economic analysis of cultural effects in the labour market. Using extensive new data from fourteen countries, the author finds tangible evidence of substantial cross-cultural differences in beliefs about wage inequality.
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Chapter 8: Norms of Need and Minimum Wages

Siobhan Austen


8.1 INTRODUCTION This chapter focuses on the role played in the labour market by norms of need. As was outlined in Chapter Two, these norms relate, in part, to shared beliefs about the right of individuals to a minimum outcome from the distribution of the proceeds of a group’s resources. Rawls’s (1971) difference principle, which tells us to maximize the prospects of the worst off individual in our choice of distributive institutions, is characteristic of the type of value that such norms embody. Boulding’s (1962) principle of ‘disalienation’, which asserts that no person in a society should be left without a claim on its resources, also reflects these values. The chapter investigates, in particular, the possible relationship between norms of need and the regulation of minimum wage rates in the Australian context. The discussion of theoretical approaches to the analysis of social norms in Chapter Three highlighted the possibility that employers, workers and other community members who shared such norms would favour wage structures that guaranteed a minimum wage outcome. Such a notion was evident in the classical analysis of wages, where the ‘natural’ or subsistence wage rate was defined in terms of the minimum wage level consistent with ‘common humanity’. The theoretical analysis of social norms also pointed to a possible relationship between social norms and the form of government intervention in the regulation of wage rates. Norms of need are likely to translate into attitudes about the legitimacy of government control of minimum wage rates. If...

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