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Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure

  • Harry J. Holzer
  • Lawrence F. Katz
  • Alan B. Krueger

This paper uses job applications- data to test the existence of non-competitive, ex-ante rents in the labor market. We first examine whether jobs that pay the legal minimum wage face an excessively of labor as measured by the number of job applications received for the most recent positions filled by the firs. The results indicate that openings for jobs that pay the minimum wage attract significantly more job applications than jobs that pay either more or less than the minimum wage. This spike in the job application rate distribution indicates that ex-ante rents generated for employees by an above market-level minimum wage do not appear to be completely dissipated by employer actions. The second part of the paper uses a similar approach to examine whether jobs in high-wage industries pay above market-clearing wage rates. We find a weak, positive relationship between inter-industry applications differentials and inter-industry wage differentials. In addition, our results indicate that employer size has a sizeable positive effect on the job application rate even after controlling for the wage rate. The paper considers several possible explanations for these findings.

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File URL: http://www.nber.org/papers/w2561.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2561.

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Date of creation: Apr 1988
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Publication status: published as The Quarterly Journal of Economics, 106, August 1991, pp. 739-768.
Handle: RePEc:nbr:nberwo:2561
Note: LS
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  1. Joseph E. Stiglitz, 1984. "Theories of Wage Rigidity," NBER Working Papers 1442, National Bureau of Economic Research, Inc.
  2. Charles Brown & Curtis Gilroy & Andrew Kohen, 1983. "Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment and Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 3-31.
  3. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
  4. Barron, John M & Bishop, John, 1985. "Extensive Search, Intensive Search, and Hiring Costs: New Evidence on Employer Hiring Activity," Economic Inquiry, Western Economic Association International, vol. 23(3), pages 363-82, July.
  5. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S87-104, August.
  6. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc.
  7. Alan B. Krueger, 1988. "The Determinants of Queues for Federal Jobs," NBER Working Papers 2499, National Bureau of Economic Research, Inc.
  8. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
  9. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1, August.
  10. Lang, Kevin, 1991. "Persistent Wage Dispersion and Involuntary Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 181-202, February.
  11. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc.
  12. K. Newey, Whitney, 1985. "Generalized method of moments specification testing," Journal of Econometrics, Elsevier, vol. 29(3), pages 229-256, September.
  13. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
  14. Wessels, Walter J, 1980. "The Effect of Minimum Wages in the Presence of Fringe Benefits: An Expanded Model," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 293-313, April.
  15. Carmichael, Lorne, 1985. "Can Unemployment Be Involuntary? Comment [Equilibrium Unemployment as a Worker Discipline Device]," American Economic Review, American Economic Association, vol. 75(5), pages 1213-14, December.
  16. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-38, June.
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