Original title: Worker heterogeneity and the asymmetric effects of minimum wages
Authors: Luna Alpizar, Jose Luis
Document type: Research reports
Year: 2019
Language: eng
Series: CERGE-EI Working Paper Series, volume: 642
Abstract: This paper explores the notion that minimum wages affect different lowskilled workers aszmmetrically due to productivity differences. In a search model with worker heterogeneity, a rising minimum wage lowers the employment and labor force participation of the least productive workers by pricing them out of the market, while having the opposite effect on other low-skilled workers that remain hirable. CPS data supports these predictions, a rise in the minimum reduces the employment and labor force participation of teenagers with less than high school education, but has the opposite effect on prime-age workers with high school attainment. The calibrated model requires small firm surpluses to match these observations. If firm surplus is small due to high nonmarket activity values, a moderate rise in the minimum improves aggregate welfare even when the worker's bergaining weight is high.
Keywords: minimum wages; search and matching; unemployment

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: https://www.cerge-ei.cz/pdf/wp/Wp642.pdf
Original record: http://hdl.handle.net/11104/0296588

Permalink: http://www.nusl.cz/ntk/nusl-395937


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Research > Institutes ASCR > Economics Institute
Reports > Research reports
 Record created 2019-06-11, last modified 2023-12-06


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