Job and wage mobility in a search model with non-compliance (exemptions) with the minimum wage

Zvi Eckstein (), Suqin Ge and Barbara Petrongolo

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We use a simple job search model to explain the doubling of mean hourly earnings of white males, and the five-fold increase in their variance, during the first 18 years of labor market experience. For this purpose we embody minimum wage regulations and imperfect compliance in a job search model encompassing job mobility and on-the-job wage growth as potential sources of wage dynamics. The model is estimated by simulated GMM using data from the NLSY79. Our estimated model provides a good fit for the observed levels and trends of the main job and wage mobility data, and in particular it replicates very well the increase in the first and second moments of the wage distribution over the life cycle, as well as the fall in the fraction of workers paid below the minimum wage. Our estimates imply that job mobility explains between one third and one half of the observed wage growth. Counterfactual experiments of increases in the minimum wage and/or compliance deliver small effects on both the actual wage distribution and the nonemployment rate.

Keywords: minimum wages; compliance; exemptions; job search; wage growth (search for similar items in EconPapers)
JEL-codes: J42 J63 J64 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://eprints.lse.ac.uk/4961/ Open access version. (application/pdf)

Related works:
Working Paper: Job and Wage Mobility in a Search Model with Non-Compliance (Exemptions) with the Minimum Wage (2006)
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:ehl:lserod:4961

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().