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Minimum Wages and Youth Employment

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  • Gorry, Aspen

Abstract

Significant employment differences between the US and Europe are concentrated among young workers. This paper constructs a labor search model that accounts for age patterns of employment. Work experience reduces the probability that workers lose their jobs. By introducing minimum wages, the model explains empirical findings on the effects of minimum wage laws. In addition, the model shows that minimum wages can account for about half of the differences in youth employment between Europe and the United States.

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File URL: http://mpra.ub.uni-muenchen.de/25296/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25296.

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Date of creation: 24 Jun 2010
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Handle: RePEc:pra:mprapa:25296

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Keywords: Minimum wages; youth employment; France; United States;

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References

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  1. Richard Rogerson, 2006. "Understanding Differences in Hours Worked," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(3), pages 365-409, July.
  2. John M. Abowd & Francis Kramarz & Thomas Lemieux & David N. Margolis, 1997. "Minimum Wages and Youth Employment in France and the United States," NBER Working Papers 6111, National Bureau of Economic Research, Inc.
  3. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  4. Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR & CES & MSH, vol. 12(25), pages 265-292, October.
  5. Gorry, Aspen, 2010. "Experience and Worker Flows," MPRA Paper 25298, University Library of Munich, Germany.
  6. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  7. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
  8. Edward C. Prescott, 2003. "Why do Americans work so much more than Europeans?," Staff Report 321, Federal Reserve Bank of Minneapolis.
  9. Fougère, Denis & Kramarz, Francis & Magnac, Thierry, 2000. "Youth Employment Policies In France," CEPR Discussion Papers 2394, C.E.P.R. Discussion Papers.
  10. Neumark, David & Nizalova, Olena Y., 2004. "Minimum Wage Effects in the Longer Run," IZA Discussion Papers 1428, Institute for the Study of Labor (IZA).
  11. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027.
  12. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
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  14. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
  15. Richard Rogerson, 2008. "Structural Transformation and the Deterioration of European Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 235-259, 04.
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  17. Guillaume Rocheteau & Murat Tasci, 2008. "Positive and normative effects of a minimum wage," Working Paper 0801, Federal Reserve Bank of Cleveland.
  18. Christopher J. Flinn, 2006. "Minimum Wage Effects on Labor Market Outcomes under Search, Matching, and Endogenous Contact Rates," Econometrica, Econometric Society, vol. 74(4), pages 1013-1062, 07.
  19. Derek Neal, 1998. "The Complexity of Job Mobility Among Young Men," NBER Working Papers 6662, National Bureau of Economic Research, Inc.
  20. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
  21. Bazen, Stephen & Skourias, Nicolas, 1997. "Is there a negative effect of minimum wages on youth employment in France?," European Economic Review, Elsevier, vol. 41(3-5), pages 723-732, April.
  22. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-90, September.
  23. Walter J. Wessels, 2005. "Does the Minimum Wage Drive Teenagers Out of the Labor Force?," Journal of Labor Research, Transaction Publishers, vol. 26(1), pages 169-176, January.
  24. Lothar Funk & Hagen Lesch, 2006. "Minimum Wage Regulations in Selected European Countries," Intereconomics: Review of European Economic Policy, Springer, vol. 41(2), pages 78-92, March.
  25. Michael Pries & Richard Rogerson, 2005. "Hiring Policies, Labor Market Institutions, and Labor Market Flows," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 811-839, August.
  26. Neumark, David & Wascher, William, 2003. "Minimum wages and skill acquisition: another look at schooling effects," Economics of Education Review, Elsevier, vol. 22(1), pages 1-10, February.
  27. Dolado, Juan José & Kramarz, F. & Manning, A. & Machin, S., 1996. "The economic impact of minimum wages in Europe," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3305, Universidad Carlos III de Madrid.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Minimum wages and youth unemployment
    by Economic Logician in Economic Logic on 2010-10-21 13:49:00
  2. Minimilöner och ungdomsarbetslöshet
    by Niclas Berggren in Nonicoclolasos on 2010-10-23 08:16:31

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  1. Economic Logic blog

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