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Schooling, Training, Growth and Minimum Wages

Author

Listed:
  • Morten O. Ravn
  • Jan Rose Sørensen

Abstract

We examine how the long‐run growth performance of an economy is affected by a labor market distortion. In our model, growth occurs through skill formation, and skills are generated through schooling and training of unskilled workers. We analyze how a minimum wage legislation affects long‐run growth. In general, the effects are ambiguous. The reason is that while a minimum wage discourages training, it also encourages schooling. The net effect then depends on whether training or schooling dominates the long‐run increases in labor productivity. JEL classification: I20, J31, O40

Suggested Citation

  • Morten O. Ravn & Jan Rose Sørensen, 1999. "Schooling, Training, Growth and Minimum Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 441-457, September.
    • Handle: RePEc:bla:scandj:v:101:y:1999:i:3:p:441-457
    DOI: 10.1111/1467-9442.00165
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    Citations

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    Cited by:

    1. Luciano Fanti & Luca Gori, 2011. "On economic growth and minimum wages," Journal of Economics, Springer, vol. 103(1), pages 59-82, May.
    2. Zsófia L. Bárány, 2016. "The Minimum Wage and Inequality: The Effects of Education and Technology," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 237-274.
    3. Cardoso, Ana Rute, 2009. "Long-Term Impact of Youth Minimum Wages: Evidence from Two Decades of Individual Longitudinal Data," IZA Discussion Papers 4236, Institute of Labor Economics (IZA).
    4. Tomás Gómez Rodríguez & Humberto Ríos Bolívar & Ali Aali Bujari, 2018. "Salario eficiente y crecimiento económico para el caso de América Latina. (Efficient wages and Economic Growth in Latin America)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 213-235, October.
    5. Zsofia Barany, 2016. "The Minimum Wage and Inequality: The Effects of Education and Technology," SciencePo Working papers hal-03594158, HAL.
    6. Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2020. "Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy," Economics Letters, Elsevier, vol. 188(C).
    7. Brecht Boone & Freddy Heylen, 2019. "Cross‐Country Differences in Unemployment: Fiscal Policy, Unions, and Household Preferences in General Equilibrium," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1270-1302, July.
    8. Luciano Fanti & Luca Gori, 2010. "Economic Growth and Welfare in a Neoclassical Overlapping Generations Growth Model with Minimum Wages and Consumption Taxes," LABOUR, CEIS, vol. 24(3), pages 238-262, September.
    9. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09i8hjg0kpi is not listed on IDEAS
    10. Dessing, Maryke, 2004. "Implications for minimum-wage policies of an S-shaped labor-supply curve," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 543-568, April.
    11. Luciano Fanti & Luca Gori, 2008. "'Backyard' technology and regulated wages in a neoclassical OLG growth model," Discussion Papers 2008/74, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    12. Zsofia Barany, 2011. "The minimum wage and inequality - the effects of education and technology," SciencePo Working papers hal-01069474, HAL.
    13. Christian Ragacs, 2002. "Warum Mindestlöhne die Beschäftigung nicht reduzieren müssen," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 28(1), pages 59-84.
    14. Ana Rute Cardoso, 2019. "Long‐Term Impact of Minimum Wages on Workers’ Careers: Evidence from Two Decades of Longitudinal Linked Employer–Employee Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(4), pages 1337-1380, October.
    15. Luciano Fanti & Luca Gori, 2007. "Fertility, income and welfare in an OLG model with regulated wages," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 54(4), pages 405-427, December.
    16. repec:hal:spmain:info:hdl:2441/4jgjdlef848r49dq2dv8go26r7 is not listed on IDEAS
    17. Nicolas Bauduin & Joël Hellier, 2006. "Skill Dynamics, Inequality and Social Policies," Working Papers 34, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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