Minimum Wages and Spatial Equilibrium: Theory and Evidence

Joan Monras

Working Papers from CEMFI

Abstract: This paper introduces a spatial equilibrium model that relates earnings, employment, and internal migration responses to minimum wage increases. Population moves to or away from regions that increase minimum wages depending on the labor demand elasticity and on the financing of unemployment benefits. The empirical evidence shows that increases in minimum wages lead to increases in average wages and decreases in employment among the low-skilled. The labor demand elasticity is estimated to be above 1, in the model a necessary condition for the migration responses observed in the data. Low-skilled workers tend to leave the regions that increase minimum wages.

Keywords: Minimum wages; spatial equilibrium; internal migration. (search for similar items in EconPapers)
JEL-codes: J08 J23 J38 J61 R12 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.cemfi.es/ftp/wp/1615.pdf (application/pdf)

Related works:
Journal Article: Minimum Wages and Spatial Equilibrium: Theory and Evidence (2019)
Working Paper: Minimum Wages and Spatial Equilibrium: Theory and Evidence (2016)
Working Paper: Minimum Wages and Spatial Equilibrium: Theory and Evidence (2016)
Working Paper: Minimum Wages and Spatial Equilibrium: Theory and Evidence (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cmf:wpaper:wp2016_1615

Access Statistics for this paper

More papers in Working Papers from CEMFI Contact information at EDIRC.
Bibliographic data for series maintained by Araceli Requerey ().