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Job and wage mobility with minimum wages and imperfect compliance

Eckstein, Zvi, Ge, Suqin and Petrongolo, Barbara (2011) Job and wage mobility with minimum wages and imperfect compliance. Journal of Applied Econometrics, 26 (4). pp. 580-612. ISSN 0883-7252

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Abstract

We propose a job search model with minimum wage regulations and imperfect compliance to explain the doubling of the mean and variance of hourly earnings of white males during the first 18 years of labor market experience. The model encompasses job mobility and on-the-job wage growth as sources of wage dynamics, and is estimated by simulated generalized method of moments using data from the National Longitudinal Survey of Youths 1979. Our estimates provide a good fit for the observed levels and trends of the main job and wage mobility data, and for the increase in the mean and variance of wages over the life cycle, as well as for the fall in the fraction of workers paid below the minimum wage. Job mobility explains 40-50% of the observed wage growth. Increases in the minimum wage and/or compliance deliver small effects on the wage distribution and the nonemployment rate.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1002/(IS...
Additional Information: © 2011 John Wiley & Sons
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Economics
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 17 Jun 2011 13:04
URL: http://eprints.lse.ac.uk/36677/

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