Minimum Wages, Technological Progress and Loss of Skill

Birthe Larsen

Working Papers from Centre for Labour Market and Social Research, Danmark-

Abstract: This paper considers the effect of a productivity shock when the unemployed worker risks a loss of skill. This divides the workers into short-term and long-term unemployment. In this economy, the short-term unemployed and long-term unemployed in the economy search for employment in the most productive sector and in the antiquated sector, respectively. In this framework, the implications of a shock with a minimum wage law is compared to the implications when wages are perfectly flexible. The economic variables considered are short-term and long-term unemployment, wages and wage disparity, and the equilibrium rate of unemployment.

Keywords: MINIMUM WAGE; UNEMPLOYMENT (search for similar items in EconPapers)
JEL-codes: E20 J40 J60 O30 (search for similar items in EconPapers)
Pages: 19 pages
Date: 1998
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Citations: View citations in EconPapers (2)

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Journal Article: Minimum wages, technological progress and loss of skill (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:clmsre:98-03

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