Employment Effects of Minimum Wages in Inflexible Labor Markets
AbstractThis paper structurally models and estimates the employment effects of minimum wages in inflexible labor markets with fixed employment costs. When there are fixed costs associated with employment, minimum wage regulation not only results in a reduction in employment among low productivity workers but also shifts the distribution of hours for the available jobs in the market, resulting in scarcity of part-time jobs. Thus, for sufficiently high employment costs, a minimum wage makes it less likely for "marginal" workers to enter and stay in the labor market and has important employment effects. I estimate the model using survey data from Turkey. I find significant reduction in employment due to the loss of part time jobs caused by the national minimum wage policy in this highly inflexible labor market.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 8016.
Date of creation: 2006
Date of revision: 2008
Find related papers by JEL classification:
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-15 (All new papers)
- NEP-CWA-2008-04-15 (Central & Western Asia)
- NEP-LAB-2008-04-15 (Labour Economics)
- NEP-MAC-2008-04-15 (Macroeconomics)
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