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Labor Market Connections, Minimum Wages, and Youth Employment

Aspen Gorry

No 794, 2008 Meeting Papers from Society for Economic Dynamics

Abstract: We construct a labor search model where individuals can be either connected or unconnected. Connected workers get a higher rate of job offers when unemployed and are separated from their jobs at a lower rate than unconnected workers. Unconnected workers can become connected through employment. This model can account for age patterns in employment data. By introducing minimum wages, the model explains empirical findings on the effects of minimum wage laws. Finally, the model shows that minimum wages account for a large part of the differences in youth employment between Europe and the United States.

Date: 2008
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More papers in 2008 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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