Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/21244 
Year of Publication: 
2001
Series/Report no.: 
IZA Discussion Papers No. 384
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Becker?s theory of human capital predicts that minimum wages should reduce training investments for affected workers because they prevent these workers from taking wage cuts necessary to finance training. In contrast, in noncompetitive labor markets, minimum wages tend to increase training of affected workers because they induce firms to train their unskilled employees. We provide new estimates on the impact of the state and federal increases in the minimum wage between 1987 and 1992 on the training of low wage workers. We find no evidence that minimum wages reduce training, and little evidence that they tend to increase training. We therefore develop a hybrid model where minimum wages reduce the training investments of workers who were taking wage cuts to finance their training, while increasing the training of other workers. Finally, we provide some evidence consistent with this hybrid model.
Subjects: 
Imperfect labor markets
low wage workers
general human capital
firm sponsored training
JEL: 
J31
J41
J24
Document Type: 
Working Paper

Files in This Item:
File
Size
472.67 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.