Wage Dispersion and the Minimum Wage Spike in a Search Economy With Wage-Posting

Natalya Shelkova ()

Review of Economics and Institutions, 2016, vol. 7, issue 1

Abstract: Wage distributions in economies with mandated minimum wage exhibit both wage dispersion and wage clustering known as the minimum wage spike. The paper builds a search-theoretic model that reconciles the two phenomena simultaneously under the assumptions of wage-posting, urn-ball matching, rm heterogeneity, and wage-dependent search cost. Numerical simulations demonstrate the potency of the model. A non-degenerate minimum wage spike and wage dispersion are obtained. The model also shows that a higher, non-binding minimum wage can be associated with greater employment (and higher wages), previously found in empirical studies.

Keywords: search; wage-posting; minimum wage; minimum wage spike; wage dispersion. (search for similar items in EconPapers)
JEL-codes: E24 J30 J64 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
https://rei.unipg.it/rei/article/view/195
Requires registration. Users must be registered and log in to access full text

Related works:
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:pia:review:v:7:y:2016:i:1:n:3

Access Statistics for this article

Review of Economics and Institutions is currently edited by Carlo Andrea Bollino

More articles in Review of Economics and Institutions from Università di Perugia Contact information at EDIRC.
Bibliographic data for series maintained by Ubaldo Pizzoli ().