The Distributional Impacts of Minimum Wage Increases When Both Labor Supply and Labor Demand Are Endogenous
We develop and estimate a one-shot search model with endogenous firm entry, and therefore zero expected profits, and endogenous labor supply. Positive employment effects from a minimum wage increase can result as the employment level depends upon both the numbers of searching firms and workers. Welfare implications are similar to the classical analysis: workers who most want the minimum wage jobs are hurt by the minimum wage hike with workers marginally interested in minimum wage jobs benefiting. We estimate the model using CPS data on teenagers and show that small changes in the employment level are masking large changes in labor supply and demand. Teenagers from well-educated families see increases in their employment probabilities and push out their less-privileged counterparts from the labor market. This article has supplementary material online.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 29 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.amstat.org/publications/jbes/index.cfm?fuseaction=main|
|Order Information:||Web: http://www.amstat.org/publications/index.html|