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Labor Market Connections, Minimum Wages, and Youth Employment

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  • Aspen Gorry

    (University of Chicago)

Abstract

We construct a labor search model where individuals can be either connected or unconnected. Connected workers get a higher rate of job offers when unemployed and are separated from their jobs at a lower rate than unconnected workers. Unconnected workers can become connected through employment. This model can account for age patterns in employment data. By introducing minimum wages, the model explains empirical findings on the effects of minimum wage laws. Finally, the model shows that minimum wages account for a large part of the differences in youth employment between Europe and the United States.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2008 Meeting Papers with number 794.

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Date of creation: 2008
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Handle: RePEc:red:sed008:794

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  1. David Neumark & Olena Nizalova, 2007. "Minimum Wage Effects in the Longer Run," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 42(2).
  2. Fougère, Denis & Kramarz, Francis & Magnac, Thierry, 2000. "Youth Employment Policies In France," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2394, C.E.P.R. Discussion Papers.
  3. Bazen, Stephen & Skourias, Nicolas, 1997. "Is there a negative effect of minimum wages on youth employment in France?," European Economic Review, Elsevier, Elsevier, vol. 41(3-5), pages 723-732, April.
  4. 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.
  5. Walter J. Wessels, 2005. "Does the Minimum Wage Drive Teenagers Out of the Labor Force?," Journal of Labor Research, Transaction Publishers, Transaction Publishers, vol. 26(1), pages 169-176, January.
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Cited by:
  1. Lester Hadsell & Michael McAvoy & Jaime McGovern, 2013. "Promoting Economic Literacy and Self-Awareness Through An Understanding Of Economic Ideology," New York Economic Review, New York State Economics Association (NYSEA), New York State Economics Association (NYSEA), vol. 44(1), pages 54-76.

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