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.
Fichier principal
SJE MS 13231 -final.pdf ( 192.48 Ko
)
Télécharger
SJE 13231 OL APP-annexe.pdf ( 327.53 Ko
)
Télécharger
Origine :
Fichiers produits par l'(les) auteur(s)
Loading...