Minimum Wage Shocks, Employment Flows and Labor Market Frictions

Arindrajit Dube, T. William Lester and Michael Reich

Institute for Research on Labor and Employment, Working Paper Series from Institute of Industrial Relations, UC Berkeley

Abstract: We provide the first estimates of the effects of minimum wages on employment flows in the U.S. labor market, identifying the impact using policy discontinuities at state borders. We find that minimum wages have a sizable negative effect on employment flows but not stocks: separations and accessions fall among affected workers. We interpret our findings using a job-ladder model, in which minimum wage increases can reduce job-to-job transitions. We find that a standard calibration of the model generates predicted relative magnitudes of the employment stock and flow elasticities that are very close to our reduced-form estimates.

Keywords: Social and Behavioral Sciences; Minimum Wage; Labor Market Flows; Job Turnover; Search Frictions; Monopsony (search for similar items in EconPapers)
Date: 2012-04-06
New Economics Papers: this item is included in nep-dge, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Minimum Wage Shocks, Employment Flows and Labor Market Frictions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:indrel:qt76p927ks

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