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Minimum Wage Noncompliance and the Employment Decision

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  • Yaniv, Gideon
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    Abstract

    The employment effects of minimum wage noncompliance have been the focus of several theoretical contributions to the minimum wage literature, the dominating conclusion being that the noncomplying employer, while reducing employment below the free-market level, will still employ more labor than he would if complying. Allowing, however, for partial compliance, this study applies a portfolio-choice approach to the employer's problem, concluding surprisingly that the minimum wage law may give rise to a full-compliance employment effect even if it is partially evaded. This result is further shown to hold with regard to labor market laws in general. Copyright 2001 by University of Chicago Press.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Labor Economics.

    Volume (Year): 19 (2001)
    Issue (Month): 3 (July)
    Pages: 596-603

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    Handle: RePEc:ucp:jlabec:v:19:y:2001:i:3:p:596-603

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    Web page: http://www.journals.uchicago.edu/JOLE/

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    Cited by:
    1. Leif Danziger, 2009. "Endogenous Monopsony and the Perverse Effect of the Minimum Wage in Small Firms," CESifo Working Paper Series 2740, CESifo Group Munich.
    2. Gil S. Epstein & Odelia Heizler, 2007. "Illegal Migration, Enforcement and Minimum Wage," CReAM Discussion Paper Series 0708, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    3. Danziger, Leif, 2009. "Noncompliance and the Effects of the Minimum Wage on Hours and Welfare in Competitive Labor Markets," IZA Discussion Papers 4408, Institute for the Study of Labor (IZA).
    4. Jonathan Meer & Jeremy West, 2013. "Effects of the Minimum Wage on Employment Dynamics," NBER Working Papers 19262, National Bureau of Economic Research, Inc.
    5. Basu, Arnab K & Chau, Nancy H & Kanbur, Ravi, 2005. "Turning a Blind Eye: Costly Enforcement, Credible Commitment and Minimum Wage Laws," CEPR Discussion Papers 5107, C.E.P.R. Discussion Papers.
    6. repec:ebl:ecbull:v:10:y:2007:i:4:p:1-7 is not listed on IDEAS
    7. Yang-Ming Chang & Bhavneet Walia, 2007. "Wage discrimination and partial compliance with the minimum wage law," Economics Bulletin, AccessEcon, vol. 10(4), pages 1-7.
    8. Yaniv, Gideon, 2006. "On the employment effect of noncompliance with the minimum wage law," International Review of Law and Economics, Elsevier, vol. 26(4), pages 557-564, December.
    9. repec:ebl:ecbull:v:10:y:2005:i:4:p:1-10 is not listed on IDEAS
    10. Chang, Yang-Ming & Huang, Biing-Wen & Chen, Yun-Ju, 2012. "Labor supply, income, and welfare of the farm household," Labour Economics, Elsevier, vol. 19(3), pages 427-437.
    11. repec:ebl:ecbull:v:10:y:2004:i:9:p:1-7 is not listed on IDEAS

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