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Employment and distribution effects of the minimum wage

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  • Slonimczyk, Fabián
  • Skott, Peter

Abstract

This paper analyzes the effects of the minimum wage on wage inequality, relative employment and over-education. We show that over-education can be generated endogenously and that an increase in the minimum wage can raise both total and low-skill employment, and produce a fall in inequality. Evidence from the US suggests that these theoretical results are empirically relevant. The over-education rate has been increasing and our regression analysis suggests that the decrease in the minimum wage may have led to a deterioration of the employment and relative wage of low-skill workers.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 84 (2012)
Issue (Month): 1 ()
Pages: 245-264

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Handle: RePEc:eee:jeborg:v:84:y:2012:i:1:p:245-264

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Minimum wage; Earnings inequality; Monopsony; Efficiency wage; Over-education;

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References

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  1. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Does the minimum wage raise employment?
    by Economic Logician in Economic Logic on 2010-05-21 14:28:00
  2. Small truths about the minimum wage
    by chris dillow in Stumbling and Mumbling on 2010-11-13 12:26:47
  3. The low pay problem
    by chris dillow in Stumbling and Mumbling on 2012-10-29 14:17:05
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Peter Skott, 2013. "Increasing Inequality and Financial Instability," Review of Radical Political Economics, Union for Radical Political Economics, vol. 45(4), pages 478-488, December.
  2. Slonimczyk, Fabian, 2011. "Earnings inequality and skill mismatch in the U.S.: 1973-2002," MPRA Paper 35449, University Library of Munich, Germany.
  3. Peter Skott, 2011. "Heterodox macro after the crisis," UMASS Amherst Economics Working Papers 2011-23, University of Massachusetts Amherst, Department of Economics.
  4. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).

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  1. Economic Logic blog

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