IDEAS home Printed from https://ideas.repec.org/p/red/sed008/794.html
   My bibliography  Save this paper

Labor Market Connections, Minimum Wages, and Youth Employment

Author

Listed:
  • 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.

Suggested Citation

  • Aspen Gorry, 2008. "Labor Market Connections, Minimum Wages, and Youth Employment," 2008 Meeting Papers 794, Society for Economic Dynamics.
    • Handle: RePEc:red:sed008:794
    as

    Download full text from publisher

    File URL: https://red-files-public.s3.amazonaws.com/meetpapers/2008/paper_794.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John M. Abowd & Francis Kramarz & Thomas Lemieux & David N. Margolis, 2000. "Minimum Wages and Youth Employment in France and the United States," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 427-472, National Bureau of Economic Research, Inc.
    2. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    3. 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 772-793, September.
    4. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    5. Bramoullé, Yann & Saint-Paul, Gilles, 2010. "Social networks and labor market transitions," Labour Economics, Elsevier, vol. 17(1), pages 188-195, January.
    6. Steven J. Davis, 1992. "Cross-Country Patterns of Change in Relative Wages," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 239-300, National Bureau of Economic Research, Inc.
    7. Lars Ljungqvist & Thomas J. Sargent, 1998. "The European Unemployment Dilemma," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 514-550, June.
    8. Juan Dolado & Francis Kramarz & Steven Machin & Alan Manning & David Margolis & Coen Teulings, 1996. "The Economic Impact of Minimum Wages in Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353896, HAL.
    9. Neal, Derek, 1999. "The Complexity of Job Mobility among Young Men," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 237-261, April.
    10. Fougere, Denis & Kramarz, Francis & Magnac, Thierry, 2000. "Youth employment policies in France," European Economic Review, Elsevier, vol. 44(4-6), pages 928-942, May.
    11. 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.
    12. Robert H. Meyer & David A. Wise, 1982. "High School Preparation and Early Labor Force Experience," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 277-348, National Bureau of Economic Research, Inc.
    13. David Neumark & Olena Nizalova, 2007. "Minimum Wage Effects in the Longer Run," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    14. 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.
    15. Edward C. Prescott, 2002. "Prosperity and Depression," American Economic Review, American Economic Association, vol. 92(2), pages 1-15, May.
    16. 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.
    17. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-690, September.
    18. Lothar Funk & Hagen Lesch, 2006. "Minimum Wage Regulations in Selected European Countries," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 41(2), pages 78-92, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gorry, Aspen, 2013. "Minimum wages and youth unemployment," European Economic Review, Elsevier, vol. 64(C), pages 57-75.
    2. Isabel Cairó & Tomaz Cajner, 2018. "Human Capital and Unemployment Dynamics: Why More Educated Workers Enjoy Greater Employment Stability," Economic Journal, Royal Economic Society, vol. 128(609), pages 652-682, March.
    3. Yashiv, Eran, 2007. "Labor search and matching in macroeconomics," European Economic Review, Elsevier, vol. 51(8), pages 1859-1895, November.
    4. Christopher Flinn & Ahu Gemici & Steven Laufer, 2017. "Search, Matching, and Training," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 260-297, April.
    5. Sagiri Kitao & Lars Ljungqvist & Thomas Sargent, 2017. "A Life-Cycle Model of Trans-Atlantic Employment Experiences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 320-349, April.
    6. Anne BUCHER, 2011. "Youth Labor Market Outcomes: A Model with Learning on Match Quality," LIDAM Discussion Papers IRES 2011027, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Richard Rogerson & Robert Shimer & Randall Wright, 2004. "Search-Theoretic Models of the Labor Market-A Survey," NBER Working Papers 10655, National Bureau of Economic Research, Inc.
    8. Paul Jackson & Victor Ortego-Marti, 2020. "Skill Loss during Unemployment and the Scarring Effects of the COVID-19 Pandemic," Working Papers 202020, University of California at Riverside, Department of Economics.
    9. Etienne Lalé, 2018. "Turbulence and the employment experience of older workers," Quantitative Economics, Econometric Society, vol. 9(2), pages 735-784, July.
    10. Rogerson, Richard & Shimer, Robert, 2011. "Search in Macroeconomic Models of the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 7, pages Pages: 61, Elsevier.
    11. Christian Ragacs, 2003. "Mindestlöhne und Beschäftigung: Ein Überblick über die neuere empirische Literatur," Working Papers geewp25, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    12. Christopher Flinn & Joseph Mullins, 2015. "Labor Market Search And Schooling Investment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(2), pages 359-398, May.
    13. repec:idb:brikps:7203 is not listed on IDEAS
    14. Ortego-Marti, Victor, 2016. "Unemployment history and frictional wage dispersion," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 5-22.
    15. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    16. Verónica Alaimo & Mariano Bosch & David S. Kaplan & Carmen Pagés & Laura Ripani, 2015. "Jobs for Growth," IDB Publications (Books), Inter-American Development Bank, number 90977, February.
    17. David Andolfatto, 2007. "Search Models of Unemployment," Discussion Papers dp07-01, Department of Economics, Simon Fraser University.
    18. Brown, Alessio J.G. & Merkl, Christian & Snower, Dennis J., 2011. "Comparing the effectiveness of employment subsidies," Labour Economics, Elsevier, vol. 18(2), pages 168-179, April.
    19. Matthias S. Hertweck & Vivien Lewis & Stefania Villa, 2021. "Going the Extra Mile: Effort by Workers and Job‐Seekers," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(8), pages 2099-2127, December.
    20. Gabriel J. Felbermayr & Mario Larch & Wolfgang Lechthaler, 2013. "Unemployment in an Interdependent World," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 262-301, February.
    21. Krolikowski, Pawel M. & McCallum, Andrew H., 2021. "Goods-market frictions and international trade," Journal of International Economics, Elsevier, vol. 129(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed008:794. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.