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Minimum wages, technological progress and loss of skill

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  • Larsen, Birthe

Abstract

This paper considers the effect of a productivity shock when the unemployed worker risks a loss of skill. This divides the workers into short-term and long-term unemployment. In this economy, the short-term unemployed and long-term unemployed in the economy search for employment in the most productive sector and in the antiquated sector, respectively. In this framework, the implications of a shock with a minimum wage law is compared to the implications when wages are perfectly flexible. The economic variables considered are short-term and long-term unemployment, wages and wage disparity, and the equilibrium rate of unemployment.
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Suggested Citation

  • Larsen, Birthe, 2001. "Minimum wages, technological progress and loss of skill," European Economic Review, Elsevier, vol. 45(8), pages 1521-1544, August.
    • Handle: RePEc:eee:eecrev:v:45:y:2001:i:8:p:1521-1544
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    References listed on IDEAS

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    1. Meghir, Costas & Whitehouse, Edward, 1997. "Labour market transitions and retirement of men in the UK," Journal of Econometrics, Elsevier, vol. 79(2), pages 327-354, August.
    2. Rosholm, M., 1997. "The Risk of marginalization in the Labour Market: Application of the Three State Dependent Competing Risks Duration Model," Papers 97-14, Centre for Labour Market and Social Research, Danmark-.
    3. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
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    Cited by:

    1. Trine Filges & Birthe Larsen, 2005. "Stick, Carrot and Skill Acquisition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 495-519, September.
    2. João Miguel Ejarque, 2009. "A Search Model with a Quasi-Network," Discussion Papers 10-23, University of Copenhagen. Department of Economics, revised Sep 2010.
    3. João Miguel Ejarque, 2010. "A search model with a quasi network," 2010 Meeting Papers 597, Society for Economic Dynamics.
    4. Jeong-Joon Lee, 2005. "Observational Equivalence between the Malmquist Index and the Solow Residual for the G-7 Countries," CIRJE F-Series CIRJE-F-354, CIRJE, Faculty of Economics, University of Tokyo.
    5. Birthe Larsen & Gisela Waisman, 2016. "Labor Market Performance Effects Of Discrimination And Loss Of Skill," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1574-1595, July.
    6. Julen Esteban-Pretel & Elisa Faraglia, 2005. "Monetary Shocks in a Model with Loss of Skills (Revised in February 2009)," CARF F-Series CARF-F-053, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    7. Julen Esteban-Pretel & Elisa Faraglia, 2005. "Monetary Shocks in a Model with Loss of Skills," CIRJE F-Series CIRJE-F-380, CIRJE, Faculty of Economics, University of Tokyo.
    8. Ejarque, João Miguel, 2009. "A Search Model with a Quasi-Network," Economics Discussion Papers 8932, University of Essex, Department of Economics.
    9. Larsen, Birthe & Waisman, Gisela, 2007. "Who is hurt by discrimination?," Working Papers 12-2007, Copenhagen Business School, Department of Economics.
    10. Julen Esteban-Pretel, 2005. "Loss of Skill and Retraining in a Matching Model," CIRJE F-Series CIRJE-F-353, CIRJE, Faculty of Economics, University of Tokyo.

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    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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