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Labor market policies in a sector specific search model with heterogeneous firms and workers

  • Lucas Navarro

    ()

    (Queen Mary, University of London)

This paper analyzes the effects of unemployment benefits and minimum wage policies in a noncompetitive labor market with two sectors, two types of workers and sector specific search. It finds that those policies can shift the job composition towards low-wage jobs and that they will never increase the number of high-wage jobs. Welfare can only increase because of reduced social vacancy creation costs. The paper is an extension of Acemoglu (2001) who finds in the homogeneous worker random search version of the model that the mentioned labor market policies can shift the job composition toward high-wage jobs, increase the number of high-wage jobs and welfare.

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Article provided by Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines in its journal Revista de Analisis Economico.

Volume (Year): 22 (2007)
Issue (Month): 2 (December)
Pages: 29-45

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Handle: RePEc:ila:anaeco:v:22:y:2007:i:2:p:29-45
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  1. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2003. "Wage bargaining with on-the-job search : theory and evidence," Research Unit Working Papers 0212, Laboratoire d'Economie Appliquee, INRA.
  2. James Albrecht & Susan Vroman, 2000. "A Matching Model with Endogenous Skill Requirements," Econometric Society World Congress 2000 Contributed Papers 0774, Econometric Society.
  3. Dolado, Juan J. & Jansen, Marcel & Jimeno, Juan F., 2003. "On-the-Job Search in a Matching Model with Heterogenous Jobs and Workers," IZA Discussion Papers 886, Institute for the Study of Labor (IZA).
  4. Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January.
  5. Steven J. Davis, 2001. "The Quality Distribution of Jobs and the Structure of Wages in Search Equilibrium," NBER Working Papers 8434, National Bureau of Economic Research, Inc.
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