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On-the-Job Search, Minimum Wages, and Labor Market Outcomes in an Equilibrium Bargaining Framework

Author

Listed:
  • James Mabli

    (Mathematica Policy Research)

  • Christopher Flinn

    (NYU)

Abstract

We look at the impact of a binding minimum wage on labor market equilibrium outcomes and welfare distributions in a model of bilateral matching and bargaining in the presence of on-the-job search. The model is estimated using the method of simulated moments using data taken from the Survey of Income and Program Participation. Even though individuals are paid the minimum wage for a small proportion of their labor market careers, we find the efficient level of the minimum wage to be high, even when allowing for endogenous contact rates via the matching function.

Suggested Citation

  • James Mabli & Christopher Flinn, 2007. "On-the-Job Search, Minimum Wages, and Labor Market Outcomes in an Equilibrium Bargaining Framework," 2007 Meeting Papers 791, Society for Economic Dynamics.
    • Handle: RePEc:red:sed007:791
    as

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    References listed on IDEAS

    as
    1. Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 28-42, January.
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    5. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
    6. Daron Acemoglu & Jörn-Steffen Pischke, 2003. "Minimum Wages And On-The-Job Training," Research in Labor Economics, in: Worker Well-Being and Public Policy, pages 159-202, Emerald Group Publishing Limited.
    7. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
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    More about this item

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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