Labor Market Policies in a Roy-Rosen Bargaining Economy

Hugo Jales and Zhengfei Yu

No 231, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: We study the effects of labor market policies using a bargaining model featuring compensating differentials (Rosen, 1986) and self-selection (Roy, 1951). The framework allows us to create a taxonomy of formal and informal employment. We use the model to estimate the effects of the minimum wage for the Brazilian economy using the “PNAD" dataset for the years 2001-2005. Our results suggest that, although the minimum wage generates unemployment and reallocation of labor to the informal sector, the policy might be desirable if the employment losses are concentrated in jobs characterized by low surplus.

Keywords: Self-Selection; Compensating Wage Differentials; Minimum Wage; Informality; Unemployment (search for similar items in EconPapers)
JEL-codes: J30 J32 J46 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2020-06
New Economics Papers: this item is included in nep-iue and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Labor market policies in a Roy-Rosen bargaining economy (2020)
Working Paper: Labor Market Policies in a Roy-Rosen Bargaining Economy (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:max:cprwps:231

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