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The Minimum Wage And Occupational Mobility

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  • Andrew Yizhou Liu

Abstract

This article quantifies the effect of minimum wages on workers' occupational mobility. I show that minimum wages decrease younger, less‐educated workers' occupational mobility and are associated with more mismatch. A search‐and‐matching model highlights two channels by which the minimum wage decreases occupational mobility. First, it compresses wages and reduces the gain from switching, leading to lower occupational mobility and more mismatch. Second, it decreases vacancy posting. Calibrating the model to the U.S. economy, the results suggest that a 15 dollar minimum wage can damp aggregate output by 0.4%, of which the wage compression channel accounts for 80%.

Suggested Citation

  • Andrew Yizhou Liu, 2022. "The Minimum Wage And Occupational Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 917-945, May.
    • Handle: RePEc:wly:iecrev:v:63:y:2022:i:2:p:917-945
    DOI: 10.1111/iere.12552
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    References listed on IDEAS

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    Cited by:

    1. Panagiotis Nanos, 2023. "Minimum wage spillover effects and social welfare in a model of stochastic job matching," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(4), pages 753-802, August.
    2. Kali, Raja & Liu, Andrew Yizhou, 2024. "Labor market power and worker turnover," European Economic Review, Elsevier, vol. 163(C).

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