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Separation incentives and minimum wages in a job-posting search framework

Author

Listed:
  • Amanda Gosling
  • Mathan Satchi

Abstract

We present a job posting model of a labour market where jobs differ in characteristics other than wages and workers differ in their marginal willingness to pay for such characteristics. This creates incentives for firms to separate workers by posting multiple jobs. The interaction between these separation incentives and the standard search frictions is the key contribution of the paper. The paper examines the implications for policies such as a minimum wage or ones which set minimum standards on these non-wage job characteristics. We show that policies that set standards on wages and the other job characteristics can increase the utility of the worst-off workers and may reduce inefficient forms of unemployment. Policies that only intervene in one aspect on the other hand may increase these forms of unemployment.

Suggested Citation

  • Amanda Gosling & Mathan Satchi, 2014. "Separation incentives and minimum wages in a job-posting search framework," Studies in Economics 1401, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:1401
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    References listed on IDEAS

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    More about this item

    Keywords

    Search; Job posting; Non-wage characteristics; Separation incentives; Minimum Wages;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J80 - Labor and Demographic Economics - - Labor Standards - - - General

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