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Participation, Recruitment Selection, and the Minimum Wage

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  • Frederic Gavrel

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper reexamines the e ciency of participation with heterogeneous workers in a search-matching model with bargained wages and free entry. As- suming that rms hire their best applicants, we state that participation is insu cient whatever workers' bargaining strengths. The reason for this is that, when holding a job, the marginal participant should receive the entire output. As a consequence, introducing a (small) minimum wage raises participation, job creation, and employment. Therefore the aggregate income of the economy is enhanced.

Suggested Citation

  • Frederic Gavrel, 2014. "Participation, Recruitment Selection, and the Minimum Wage," Working Papers halshs-00972289, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00972289
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00972289
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    References listed on IDEAS

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    1. Holmlund, Bertil, 1998. " Unemployment Insurance in Theory and Practice," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 113-141, March.
    2. Gavrel, Frédéric, 2012. "On the inefficiency of matching models of unemployment with heterogeneous workers and jobs when firms rank their applicants," European Economic Review, Elsevier, vol. 56(8), pages 1746-1758.
    3. 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.
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    7. Pedro Portugal & Ana Rute Cardoso, 2006. "Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 988-1013, September.
    8. Gavrel, Frédéric, 2009. "Technical skill bias as a response of firms to unemployment: A matching model with applicant ranking and endogenous skill requirements," Labour Economics, Elsevier, vol. 16(3), pages 304-310, June.
    9. Gavrel, Frédéric & Lebon, Isabelle & Rebière, Thérèse, 2012. "Minimum wage, on-the-job search and employment: On the sectoral and aggregate equilibrium effect of the mandatory minimum wage," Economic Modelling, Elsevier, vol. 29(3), pages 691-699.
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    12. Gavrel, Frédéric, 2011. "On the efficiency of participation with vertically differentiated workers," Economics Letters, Elsevier, vol. 112(1), pages 100-102, July.
    13. Albrecht, James & Navarro, Lucas & Vroman, Susan, 2010. "Efficiency in a search and matching model with endogenous participation," Economics Letters, Elsevier, vol. 106(1), pages 48-50, January.
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    17. French Eric, 2012. "Book Review Feature: Two Book Reviews of The Minimum Wage and Labor Market Outcomes," Economic Journal, Royal Economic Society, vol. 122(558), pages 105-110, February.
    18. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    19. Pissarides, Christopher A., 2001. "Employment protection," Labour Economics, Elsevier, vol. 8(2), pages 131-159, May.
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    Cited by:

    1. Frédéric Gavrel & Thérèse Rebière, 2017. "On the Equilibrium and Welfare Consequences of Getting Ahead of the Smiths," Post-Print halshs-01242504, HAL.
    2. Frédéric Gavrel & Thérèse Rebière, 2015. "On the Equilibrium and Welfare Consequences of Going Ahead of the Smiths," Working Papers halshs-01242504, HAL.

    More about this item

    Keywords

    search and maching; participation; heterogeneous workers; applicant ranking; efficiency; minimum wage;

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