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A Model for Analyzing Youth Labor Market Policies

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  • Gustman, Alan L
  • Steinmeier, Thomas L

Abstract

This article formulates a general equilibrium model for analyzing the youth labor market. At the heart of the model is an interplay between a labor force with heterogeneous ability levels and a minimum wage restriction. Ability affects performance on skilled jobs and, to a lesser extent, on unskilled jobs. Workers are less productive as youths than as adults. The model is applied to rationalize several results from available studies and to analyze the effects of three representative policies: a youth subminimum wage, subsidies paid to firms that hire youths, and subsidies that offset the costs of on-the-job training. Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Gustman, Alan L & Steinmeier, Thomas L, 1988. "A Model for Analyzing Youth Labor Market Policies," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 376-396, July.
  • Handle: RePEc:ucp:jlabec:v:6:y:1988:i:3:p:376-96
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    References listed on IDEAS

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    1. Meyer, Robert H & Wise, David A, 1983. "Discontinuous Distributions and Missing Persons: The Minimum Wage and Unemployed Youth," Econometrica, Econometric Society, vol. 51(6), pages 1677-1698, November.
    2. Venti, Steven F, 1984. "The Effects of Income Maintenance on Work, Schooling, and Non-Market Activities of Youth," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 16-25, February.
    3. Daniel Hamermesh, 1971. "Economic Aspects of Manpower Training Programs," Working Papers 392, Princeton University, Department of Economics, Industrial Relations Section..
    4. Michael C. Barth, 1974. "Market Effects of a Wage Subsidy," ILR Review, Cornell University, ILR School, vol. 27(4), pages 572-585, July.
    5. Martin S. Feldstein & David T. Ellwood, 1982. "Teenage Unemployment: What is the Problem?," NBER Chapters,in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 17-35 National Bureau of Economic Research, Inc.
    6. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
    7. David T. Ellwood, 1982. "Teenage Unemployment: Permanent Scars or Temporary Blemishes?," NBER Chapters,in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 349-390 National Bureau of Economic Research, Inc.
    8. Carmichael, Lorne, 1983. "Does Rising Productivity Explain Seniority Rules for Layoffs?," American Economic Review, American Economic Association, vol. 73(5), pages 1127-1131, December.
    9. Richard B. Freeman & David A. Wise, 1982. "The Youth Labor Market Problem: Its Nature Causes and Consequences," NBER Chapters,in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 1-16 National Bureau of Economic Research, Inc.
    10. Lorne Carmichael, 1983. "Firm-Specific Human Capital and Promotion Ladders," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 251-258, Spring.
    11. Richard B. Freeman & James L. Medoff, 1982. "The Youth Labor Market Problem in the United States: An Overview," NBER Chapters,in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 35-74 National Bureau of Economic Research, Inc.
    12. Robert E. Hall, 1982. "The Minimum Wage and Job Turnover in Markets for Young Workers," NBER Chapters,in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 475-498 National Bureau of Economic Research, Inc.
    13. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
    14. Gustman, Alan L & Steinmeier, Thomas L, 1981. "The Impact of Wages and Unemployment on Youth Enrollment and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 553-560, November.
    15. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
    16. repec:pri:indrel:dsp014x51hj03n is not listed on IDEAS
    17. Linda Leighton & Jacob Mincer, 1982. "Labor Turnover and Youth Unemployment," NBER Chapters,in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 235-276 National Bureau of Economic Research, Inc.
    18. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 87-104, August.
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