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Employment and Distribution Effects of the Minimum Wage

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  • Fabián Slonimczyk

    ()
    (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. 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 2012-05.

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Date of creation: Feb 2012
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Handle: RePEc:ums:papers:2012-05

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Related research

Keywords: Minimum wage; earnings inequality; monopsony; effeciency wage; over-education;

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References

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  25. Allegretto, Sylvia & Dube, Arindrajit & Reich, Michael, 2010. "Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data," Institute for Research on Labor and Employment, Working Paper Series qt7jq2q3j8, Institute of Industrial Relations, UC Berkeley.
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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. 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).
  2. Peter Skott, 2011. "Heterodox macro after the crisis," UMASS Amherst Economics Working Papers 2011-23, University of Massachusetts Amherst, Department of Economics.
  3. Fabián Slonimczyk, 2013. "Earnings inequality and skill mismatch in the U.S.: 1973–2002," Journal of Economic Inequality, Springer, vol. 11(2), pages 163-194, June.
  4. Peter Skott, 2011. "Increasing inequality and financial instability," UMASS Amherst Economics Working Papers 2011-20, University of Massachusetts Amherst, Department of Economics.

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