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Minimum wages, wage dispersion and unemployment : a review on new search models

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  • Garloff, Alfred

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

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    Abstract

    "This paper analyses theoretical effects of minimum wages on employment and the wage distribution under a frictional setting. I review new developments in search theory and discuss the influence of minimum wages on wages and employment under each setting. Thereby, a major theoretical focus of the paper is the integration of heterogeneity on both sides of the market in equilibrium search models. In the homogeneous case minimum wages do not affect employment, while in the heterogenous case theoretical results are mixed. There is no unique connection between unemployment and minimum wages, and the effect can be positive, zero or negative. However, the most advanced models, integrating heterogeneity on both sides of the market, seem to support the hypothesis that an increase in the minimum wage generally leads to an increase in unemployment as well." (Author's abstract, IAB-Doku) ((en))

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    Bibliographic Info

    Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200833.

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    Length: 40 pages
    Date of creation: 12 Aug 2008
    Date of revision:
    Handle: RePEc:iab:iabdpa:200833

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    Related research

    Keywords: Lohnpolitik; Mindestlohn; Beschäftigungseffekte; Einkommenseffekte; Lohndifferenzierung; Arbeitslosigkeit; Arbeitsplatzabbau; Lohntheorie; labour turnover; friktionelle Arbeitslosigkeit; Sucharbeitslosigkeit; Lohnstruktur; Arbeitsplatzsuchtheorie;

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    References

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    1. Christian Holzner & Andrey Launov, 2005. "Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation," Ifo Working Paper Series Ifo Working Papers No. 23, Ifo Institute for Economic Research at the University of Munich.
    2. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, December.
    3. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, vol. 50(4), pages 877-907, May.
    4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    5. Koning, Pierre & Ridder, Geert & van den Berg, Gerard J, 1995. "Structural and Frictional Unemployment in an Equilibrium Search Model with Heterogeneous Agents," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(S), pages S133-51, Suppl. De.
    6. Matthias Weiss & Alfred Garloff, 2005. "Skill-Biased Technological Change and Endogenous Benefits : the Dynamics of Unemployment and Wage Inequality," Working Papers of the Research Group Heterogenous Labor 05-08, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
    7. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 989-1016, November.
    8. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, December.
    9. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
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