Minimum wages, wage dispersion and unemployment: a review on new search models

Alfred Garloff

No 200833, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "This paper analyses theoretical effects of minimum wages on employment and the wage distribution under a frictional setting. I review new developments in search theory and discuss the influence of minimum wages on wages and employment under each setting. Thereby, a major theoretical focus of the paper is the integration of heterogeneity on both sides of the market in equilibrium search models. In the homogeneous case minimum wages do not affect employment, while in the heterogenous case theoretical results are mixed. There is no unique connection between unemployment and minimum wages, and the effect can be positive, zero or negative. However, the most advanced models, integrating heterogeneity on both sides of the market, seem to support the hypothesis that an increase in the minimum wage generally leads to an increase in unemployment as well." (Author's abstract, IAB-Doku) ((en))

Keywords: Beschäftigungseffekte; Einkommenseffekte; friktionelle Arbeitslosigkeit; labour turnover; Lohndifferenzierung; Lohnpolitik; Lohnstruktur; Lohntheorie; Mindestlohn; Sucharbeitslosigkeit; Arbeitslosigkeit; Arbeitsplatzabbau; Arbeitsplatzsuchtheorie (search for similar items in EconPapers)
JEL-codes: E24 J21 J31 J64 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2008
New Economics Papers: this item is included in nep-lab and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:200833

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