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

Author

Listed:
  • Harry J. Holzer

    (Michigan State University and NBER)

  • Lawrence F. Katz

    (Harvard University and NBER)

  • Alan B. Krueger

    (Princeton University and NBER)

Abstract

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 excessive supply of labor as measured by the number of job applications received for the most recent position filled by the firm. 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 enp1oyees 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 application 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.

Suggested Citation

  • Harry J. Holzer & Lawrence F. Katz & Alan B. Krueger, 1988. "Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure," Working Papers 610, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:230
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    Cited by:

    1. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    2. Nadja Dwenger & Pia Rattenhuber & Viktor Steiner, 2019. "Sharing the Burden? Empirical Evidence on Corporate Tax Incidence," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 107-140, November.
    3. Lawrence F. Katz & Lawrence H. Summers, 1989. "Can Interindustry Wage Differentials Justify Strategic Trade Policy?," NBER Chapters, in: Trade Policies for International Competitiveness, pages 85-124, National Bureau of Economic Research, Inc.
    4. Rebitzer, James B. & Taylor, Lowell J., 1995. "The consequences of minimum wage laws Some new theoretical ideas," Journal of Public Economics, Elsevier, vol. 56(2), pages 245-255, February.
    5. mallick, Jagannath, 2016. "Investigating the Relationship of Disparity in Income, Private investment and wage rate in Indian states: A Panel Cointegration Approach," MPRA Paper 87736, University Library of Munich, Germany, revised 09 Aug 2017.
    6. Harry J. Holzer, 1990. "Wages, Employer Costs, and Employee Performance in the Firm," ILR Review, Cornell University, ILR School, vol. 43(3), pages 147-1-164-, April.
    7. William T. Dickens & Kevin Lang, 1992. "Labor Market Segmentation Theory: Reconsidering the Evidence," NBER Working Papers 4087, National Bureau of Economic Research, Inc.
    8. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.

    More about this item

    Keywords

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    JEL classification:

    • D79 - Microeconomics - - Analysis of Collective Decision-Making - - - Other

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