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Studying Labor Market Institutions in the Lab: Minimum Wages, Employment Protection and Workfare

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Author Info

  • Falk, Armin

    ()
    (University of Bonn)

  • Huffman, David B.

    ()
    (University of Oxford)

Abstract

A central concern in economics is to understand the interplay between institutions and labor markets. In this paper we argue that laboratory experiments are a powerful tool for studying labor market institutions. One of the most important advantages is the ability to implement truly exogenous institutional change, in order to make clear causal inferences. We exemplify the usefulness of lab experiments by surveying evidence from three studies, each of which investigates a different, crucial labor market institution: minimum wage laws, employment protection legislation and workfare.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2310.

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Length: 34 pages
Date of creation: Sep 2006
Date of revision:
Publication status: published in: Journal of Institutional and Theoretical Economics, 2007, 163 (1), 30-45
Handle: RePEc:iza:izadps:dp2310

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Keywords: employment protection legislation; laboratory experiments; minimum wages; workfare;

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References

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  1. Armin Falk & Ernst Fehr & Christian Zehnder, . "The Behavioral Effects of Minimum Wages," IEW - Working Papers 247, Institute for Empirical Research in Economics - University of Zurich.
  2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
  3. Martin Brown & Armin Falk & Ernst Fehr, 2004. "Relational Contracts and the Nature of Market Interactions," Econometrica, Econometric Society, Econometric Society, vol. 72(3), pages 747-780, 05.
  4. Katz, L.F. & Krueger, A.B., 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Harvard Institute of Economic Research Working Papers 1584, Harvard - Institute of Economic Research.
  5. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(497), pages 684-708, 07.
  6. Besley, Timothy & Coate, Stephen, 1992. "Understanding welfare stigma: Taxpayer resentment and statistical discrimination," Journal of Public Economics, Elsevier, vol. 48(2), pages 165-183, July.
  7. Armin Falk & Ernst Fehr & Urs Fischbacher, . "On the Nature of Fair Behavior," IEW - Working Papers 017, Institute for Empirical Research in Economics - University of Zurich.
  8. Blount, Sally, 1995. "When Social Outcomes Aren't Fair: The Effect of Causal Attributions on Preferences," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 63(2), pages 131-144, August.
  9. Lawrence F. Katz & Alan B. Krueger, 1991. "The Effect of the New Minimum Wage Law in a Low-Wage Labor Market," NBER Working Papers 3655, National Bureau of Economic Research, Inc.
  10. Besley, Timothy & Case, Anne, 2000. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(467), pages F672-94, November.
  11. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
  12. repec:fth:prinin:298 is not listed on IDEAS
  13. William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
  14. Schlicht, Ekkehart, 1998. "On Custom in the Economy," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198292241, October.
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Cited by:
  1. Schneider, Hilmar & Uhlendorff, Arne & Zimmermann, Klaus F., 2010. "Mit Workfare aus der Sozialhilfe? Lehren aus einem Modellprojekt," IZA Standpunkte 33, Institute for the Study of Labor (IZA).
  2. Brice Corgnet & Roberto Hernán-González & Eric Schniter, 2013. "Why Real Leisure Really Matters: Incentive Effects on Real Effort in the Laboratory," Working Papers 13-22, Chapman University, Economic Science Institute.
  3. Brice Corgnet & Roberto Hernán-Gonzalez & Stephen Rassenti, 2013. "Firing Threats and Tenure: Incentive effects and impression management," Working Papers 13-15, Chapman University, Economic Science Institute.
  4. Peichl, Andreas & Siegloch, Sebastian, 2012. "Accounting for labor demand effects in structural labor supply models," Labour Economics, Elsevier, vol. 19(1), pages 129-138.
  5. Brice Corgnet & Roberto Hernán-González & Stephen Rassenti, 2011. "Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations," Working Papers 11-05, Chapman University, Economic Science Institute.

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