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Title:Do frictions matter in the labor market? Accessions, separations and minimum wage effects PDF Logo
Authors:Dube, Arindrajit
Lester, T. William
Reich, Michael
Issue Date:2011
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5811
Abstract: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.
Subjects:minimum wage
labor market flows
monopsony
Bayesian estimation
JEL:C11
C63
J23
J38
J42
J63
Persistent Identifier of the first edition:urn:nbn:de:101:1-201107042606
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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