Collusion at the Non-Binding Minimum Wage: An Automatic Stabilizer?
Natalya Shelkova ()
No 2009-41, Working papers from University of Connecticut, Department of Economics
This paper examines unemployment dynamics through the lens of a wage-posting model with two sectors and two types of workers. The model assumptions include collusion at a non-binding minimum wage, costly entry and intersectoral labor mobility. Model simulations demonstrate that collusion at a non-binding minimum wage induces entry into the low-wage sector. This dampens the overall negative employment impact of economic downturns. The excess of low-wage vacancies has shown not only to secure low unemployment rates for the low-skilled workers, but also to provide employment opportunities for the high-skilled when their industries substantially decline.
Keywords: unemployment; search; minimum wage; collusion (search for similar items in EconPapers)
JEL-codes: J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://web2.uconn.edu/economics/working/2009-41.pdf Full text (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:uct:uconnp:2009-41
Access Statistics for this paper
More papers in Working papers from University of Connecticut, Department of Economics
Address: University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063
Contact information at EDIRC.
Series data maintained by Mark McConnel ().