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Job protection renders minimum wages less harmful

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  • Schöb, Ronnie
  • Thum, Marcel

Abstract

Individual labour productivities are often unobservable for firms when hiring new workers. Job protection may prevent firms ex post from using information about labour productivities. We show that a binding minimum wage introduced in the presence of job protection will lead to lower unemployment levels than predicted by the standard labour market model with heterogeneous labour and full information. --

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Bibliographic Info

Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2011/14.

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Date of creation: 2011
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Handle: RePEc:zbw:fubsbe:201114

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Keywords: Minimum wages; unemployment; hidden information; labour market regulation;

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  1. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2014. "Personality characteristics and the decisions to become and stay self-employed," Small Business Economics, Springer, Springer, vol. 42(4), pages 787-814, April.
  2. Addison, John T. & Teixeira, Paulino, 2001. "The Economics of Employment Protection," IZA Discussion Papers 381, Institute for the Study of Labor (IZA).
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