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Article dans une revue Scandinavian Journal of Economics Année : 2015

Participation, Recruitment Selection, and the Minimum Wage

Résumé

In this paper, we re‐examine the efficiency of participation with heterogeneous workers in a search‐matching model with bargained wages and free entry. Assuming that firms hire their best applicants, we show that participation is always too low. The reason for this is a hold‐up phenomenon: to be active, a worker must pay the entire search cost whereas part of the gain from this investment goes to the firm. As a consequence, introducing a (small) minimum wage raises participation, job creation, and employment. Therefore, net aggregate income of the economy is increased.
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Dates et versions

halshs-01242505, version 1 (12-12-2015)

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Frédéric Gavrel. Participation, Recruitment Selection, and the Minimum Wage. Scandinavian Journal of Economics, 2015, 117 (4), pp.1281-1305. ⟨10.1111/sjoe.12106⟩. ⟨halshs-01242505⟩
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