Do frictions matter in the labor market? Accessions, separations and minimum wage effects

Arbeitspapier

We measure labor market frictions using a strategy that bridges design-based and structural approaches: estimating an equilibrium search model using reduced-form minimum wage elasticities identified from border discontinuities and fitted with Bayesian and LIML methods. We begin by providing the first test of U.S. minimum wage effects on labor market flows and find negative effects on employment flows, but not levels. Separations and accessions fall among restaurants and teens, especially those with low tenure. Our estimated parameters of a search model with wage posting and heterogeneous workers and firms imply that frictions help explain minimum wage effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5811

Classification and Topics

• Classification: Wirtschaft ; Bayesian Analysis: General ; Computational Techniques; Simulation Modeling ; Labor Demand ; Wages, Compensation, and Labor Costs: Public Policy ; Monopsony; Segmented Labor Markets ; Labor Turnover; Vacancies; Layoffs
• Subject: minimum wage ; labor market flows ; monopsony ; Bayesian estimation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dube, Arindrajit ; Lester, T. William ; Reich, Michael
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/52014
• URN: urn:nbn:de:101:1-201107042606
• Last update: 10.03.2025, 11:42 AM CET