Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation

Mark Owens and John Kagel

Journal of Economic Behavior & Organization, 2010, vol. 73, issue 3, 317-326

Abstract: A minimum wage raises average wages along with modest increases in employees' average effort levels, generating a Pareto improvement in social welfare. The minimum wage reduces effort in the neighborhood of the minimum, but has no systematic effect on effort levels at higher wages. As a consequence average effort increases modestly with a minimum wage as it raises average wages. Similar results are reported within groups, both when introducing and eliminating a minimum wage, although the within group effects of introducing a minimum wage are stronger than dropping it.

Keywords: Minimum; wage; Effort; response; Gift; exchange; Experiment (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (40)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:73:y:2010:i:3:p:317-326

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