Advanced Search
MyIDEAS: Login to save this paper or follow this series

The interaction of minimum wage and severance payments in a frictional labor market: theory and estimation

Contents:

Author Info

  • Carolina Silva Cassorla

    ()
    (Dpto. Fundamentos del Análisis Económico)

Registered author(s):

    Abstract

    We introduce a minimum wage and severance payments in an equilibrium labor market model with search frictions. We analyze how these policies affect endogenous job creation and destruction decisions and, more generally, the general equilibrium allocation. We structurally estimate the model's parameters and, with the resulting sets of estimates, we perform a quantitative welfare analysis. We conclude that when the dispersion in wages found in the sample is low and the share that workers receive from the surplus their job generates is below a particular level, the maximum level of welfare can be attained using either any of the two policies by themselves or an appropriate combination. However, as dispersion in wages increases, the minimum wage, by itself, can no longer reach the economy's maximum level of welfare; and when it is high enough, no policy in isolation can attain the economy's maximum level of welfare, a combination is required.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2010-22.pdf
    File Function: Fisrt version / Primera version, 2010
    Download Restriction: no

    Bibliographic Info

    Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2010-22.

    as in new window
    Length: 1 pages
    Date of creation: Jun 2010
    Date of revision:
    Publication status: Published by Ivie
    Handle: RePEc:ivi:wpasad:2010-22

    Contact details of provider:
    Postal: C/ Guardia Civil, 22, Esc 2a, 1o, E-46020 VALENCIA
    Phone: +34 96 319 00 50
    Fax: +34 96 319 00 55
    Email:
    Web page: http://www.ivie.es/
    More information through EDIRC

    Related research

    Keywords: Minimum wages; severance payments; matching models; Nash bargaining; welfare;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Martin Menner, 2009. "The role for search frictions for output and inflation dynamics: A Bayesian assessment," Working Papers. Serie AD 2009-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Maliar, Lilia & Maliar, Serguei & Valli, Fernando, 2010. "Solving the incomplete markets model with aggregate uncertainty using the Krusell-Smith algorithm," Journal of Economic Dynamics and Control, Elsevier, vol. 34(1), pages 42-49, January.
    3. Sonia Oreffice & Climent Quintana, 2009. "Anthropometry and Socioeconomics in the Couple: Evidence from the PSID," Working Papers 2009-22, FEDEA.
    4. José J. Sempere Monerris & Rafael Moner Colonques & Amparo Urbano Salvador, 2010. "Trade liberalization in vertically related markets," Working Papers. Serie AD 2010-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Cuberes, David & Dougan, William, 2009. "How Endogenous Is Money? Evidence from a New Microeconomic Estimate," MPRA Paper 17744, University Library of Munich, Germany.
    6. Negrusa, Brighita & Oreffice, Sonia, 2010. "Sexual Orientation and Household Savings: Do Homosexual Couples Save More?," IZA Discussion Papers 4961, Institute for the Study of Labor (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ivi:wpasad:2010-22. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Departamento de Edición).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.