Job protection renders minimum wages less harmful

Ronnie Schöb and Marcel Thum
Authors registered in the RePEc Author Service: Ronnie Schoeb

No 2011/14, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: Individual labour productivities are often unobservable for firms when hiring new workers. Job protection may prevent firms ex post from using information about labour productivities. We show that a binding minimum wage introduced in the presence of job protection will lead to lower unemployment levels than predicted by the standard labour market model with heterogeneous labour and full information.

Keywords: Minimum wages; unemployment; hidden information; labour market regulation (search for similar items in EconPapers)
JEL-codes: H5 J2 J3 L5 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cta, nep-lab, nep-lma and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:201114

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