Arbeitspapier
Minimum wages and firm training
The paper analyzes the influence of minimum wages on firms' incentive to train their employees. We show that this influence rests on two countervailing effects: minimum wages (i) augment wage compression and thereby raise firms' incentives to train and (ii) reduce the profitability of employees, raise the firing rate and thereby reduce training. Our analysis shows that the relative strength of these two effects depends on the employees' ability levels. Our striking result is that minimum wages give rise to skills inequality: a rise in the minimum wage leads to less training for low-ability workers and more training for those of higher ability. In short, minimum wages create a "low-skill trap."
- Language
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Englisch
- Bibliographic citation
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Series: Kiel Working Paper ; No. 1298
- Classification
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Wirtschaft
Wage Level and Structure; Wage Differentials
Human Capital; Skills; Occupational Choice; Labor Productivity
- Subject
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Firm Training
Skills Inequality
Minimum Wage
Mindestlohn
Betriebliche Bildungsarbeit
Bildungsinvestition
Qualifikation
Ungelernte Arbeitskräfte
Theorie
Deutschland
- Event
-
Geistige Schöpfung
- (who)
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Lechthaler, Wolfgang
Snower, Dennis J.
- Event
-
Veröffentlichung
- (who)
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Kiel Institute for the World Economy (IfW)
- (where)
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Kiel
- (when)
-
2006
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Lechthaler, Wolfgang
- Snower, Dennis J.
- Kiel Institute for the World Economy (IfW)
Time of origin
- 2006