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Labor Market Connections, Minimum Wages, and Youth Employment

  • Aspen Gorry

    (University of Chicago)

We construct a labor search model where individuals can be either connected or unconnected. Connected workers get a higher rate of job offers when unemployed and are separated from their jobs at a lower rate than unconnected workers. Unconnected workers can become connected through employment. This model can account for age patterns in employment data. By introducing minimum wages, the model explains empirical findings on the effects of minimum wage laws. Finally, the model shows that minimum wages account for a large part of the differences in youth employment between Europe and the United States.

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Paper provided by Society for Economic Dynamics in its series 2008 Meeting Papers with number 794.

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Date of creation: 2008
Date of revision:
Handle: RePEc:red:sed008:794
Contact details of provider: Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA
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  1. Walter J. Wessels, 2005. "Does the Minimum Wage Drive Teenagers Out of the Labor Force?," Journal of Labor Research, Transaction Publishers, vol. 26(1), pages 169-176, January.
  2. Fougere, Denis & Kramarz, Francis & Magnac, Thierry, 2000. "Youth employment policies in France," European Economic Review, Elsevier, vol. 44(4-6), pages 928-942, May.
  3. Neumark, David & Nizalova, Olena Y., 2004. "Minimum Wage Effects in the Longer Run," IZA Discussion Papers 1428, Institute for the Study of Labor (IZA).
  4. John M. Abowd & Francis Kramarz & Thomas Lemieux & David N. Margolis, 2000. "Minimum Wages and Youth Employment in France and the United States," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 427-472 National Bureau of Economic Research, Inc.
  5. Bazen, Stephen & Skourias, Nicolas, 1997. "Is there a negative effect of minimum wages on youth employment in France?," European Economic Review, Elsevier, vol. 41(3-5), pages 723-732, April.
  6. Juan Dolado & Francis Kramarz & Steven Machin & Alan Manning & David Margolis & Coen Teulings, 1996. "The Economic Impact of Minimum Wages in Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353896, HAL.
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