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Employment and Distribution Effects of the Minimum Wage

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  • Fabian Slonimczyk

    ()
    (International College of Economics and Finance, Higher School of Economics, Moscow)

  • Peter Skott

    ()
    (University of Massachusetts Amherst)

Abstract

This paper analyzes the effects of the minimum wage on wage inequality, relative employment and over-education. Using an effciency wage model we show that over-education can be generated endogenously and that an increase in the minimum wage can raise both total and low-skill employment, and produce a fall in inequality. Evidence from the US suggests that these theoretical results are empirically relevant. The over-education rate has been increasing and our regression analysis suggests that the decrease in the minimum wage may have led to a deterioration of the employment and relative wage of low-skill workers. JEL Categories: J31, J41, J42

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Bibliographic Info

Paper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2010-03.

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Date of creation: Apr 2010
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Handle: RePEc:ums:papers:2010-03

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Keywords: Minimum wage; earnings inequality; monopsony; effciency wage; over-education.;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Does the minimum wage raise employment?
    by Economic Logician in Economic Logic on 2010-05-21 14:28:00
  2. Small truths about the minimum wage
    by chris dillow in Stumbling and Mumbling on 2010-11-13 12:26:47
  3. The low pay problem
    by chris dillow in Stumbling and Mumbling on 2012-10-29 14:17:05
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Peter Skott, 2011. "Heterodox macro after the crisis," UMASS Amherst Economics Working Papers 2011-23, University of Massachusetts Amherst, Department of Economics.
  2. Peter Skott, 2011. "Increasing inequality and financial instability," UMASS Amherst Economics Working Papers 2011-20, University of Massachusetts Amherst, Department of Economics.
  3. Slonimczyk, Fabian, 2011. "Earnings inequality and skill mismatch in the U.S.: 1973-2002," MPRA Paper 35449, University Library of Munich, Germany.
  4. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).

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  1. Economic Logic blog

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