Schooling, Training, Growth and Minimum Wages

Morten Ravn and Jan Rose Sørensen

Scandinavian Journal of Economics, 1999, vol. 101, issue 3, 441-457

Abstract: We examine how the long‐run growth performance of an economy is affected by a labor market distortion. In our model, growth occurs through skill formation, and skills are generated through schooling and training of unskilled workers. We analyze how a minimum wage legislation affects long‐run growth. In general, the effects are ambiguous. The reason is that while a minimum wage discourages training, it also encourages schooling. The net effect then depends on whether training or schooling dominates the long‐run increases in labor productivity. JEL classification: I20, J31, O40

Date: 1999
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