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The Minimum Wage from a Two-Sided Perspective

Author

Listed:
  • Alessio J. G. Brown
  • Christian Merkl
  • Dennis Snower

Abstract

This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms’ job offer and workers’ job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show that sufficiently low minimum wages may do no harm to employment, since their job-offer disincentives are countervailed by their job-acceptance incentives.

Suggested Citation

  • Alessio J. G. Brown & Christian Merkl & Dennis Snower, 2014. "The Minimum Wage from a Two-Sided Perspective," CESifo Working Paper Series 4868, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4868
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    References listed on IDEAS

    as
    1. Brown, Alessio & Merkl, Christian & Snower, Dennis, 2015. "An Incentive Theory Of Matching," Macroeconomic Dynamics, Cambridge University Press, vol. 19(03), pages 643-668, April.
    2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    3. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2012. "Comparing Labor Supply Elasticities in Europe and the US: New Results," SOEPpapers on Multidisciplinary Panel Data Research 525, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Abowd, John M. & Kramarz, Francis & Margolis, David N. & Philippon, Thomas, 2000. "The Tail of Two Countries: Minimum Wages and Employment in France and the United States," IZA Discussion Papers 203, Institute for the Study of Labor (IZA).
    5. Blau, David M & Robins, Philip K, 1990. "Job Search Outcomes for the Employed and Unemployed," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 637-655, June.
    6. Ch. Pissarides., 2011. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 1.
    7. Marion König & Joachim Möller, 2009. "Impacts of minimum wages: a microdata analysis for the German construction sector," International Journal of Manpower, Emerald Group Publishing, vol. 30(7), pages 716-741, November.
    8. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
    9. Martin Falk & Bertrand Koebel, 2001. "A dynamic heterogeneous labour demand model for German manufacturing," Applied Economics, Taylor & Francis Journals, vol. 33(3), pages 339-348.
    10. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2011. "Labor Supply Elasticities in Europe and the US," Working Papers 201114, School of Economics, University College Dublin.
    11. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
    12. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
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    Citations

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    Cited by:

    1. repec:kap:atlecj:v:45:y:2017:i:2:d:10.1007_s11293-017-9537-7 is not listed on IDEAS
    2. Brown, Alessio & Kohlbrecher, Britta & Merkl, Christian & Snower, Dennis J., 2016. "The effects of productivity and benefits on unemployment: Breaking the link," MERIT Working Papers 032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. David Neumark, 2018. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," NBER Working Papers 25043, National Bureau of Economic Research, Inc.
    4. Neumark, David, 2018. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," IZA Discussion Papers 11999, Institute for the Study of Labor (IZA).
    5. Borgschulte, Mark & Cho, Heepyung, 2018. "Minimum Wages and Retirement," IZA Discussion Papers 11728, Institute for the Study of Labor (IZA).
    6. repec:kap:empiri:v:44:y:2017:i:4:d:10.1007_s10663-016-9341-7 is not listed on IDEAS
    7. David Neumark, 2017. "The Employment Effects of Minimum Wages: Some Questions We Need to Answer," NBER Working Papers 23584, National Bureau of Economic Research, Inc.
    8. David Neumark, 2018. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," CESifo Working Paper Series 7386, CESifo Group Munich.
    9. Christl, Michael & Köppl Turyna, Monika & Kucsera, Denes, 2015. "Employment effects of minimum wages in Europe revisited," MPRA Paper 65761, University Library of Munich, Germany.

    More about this item

    Keywords

    minimum wage; labor market; employment; unemployment; job offer; job acceptance;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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