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Worker heterogeneity and the asymmetric effects of minimum wages
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SYSNO ASEP 0505070 Document Type V - Research Report R&D Document Type O - Ostatní Title Worker heterogeneity and the asymmetric effects of minimum wages Author(s) Luna Alpizar, Jose Luis (NHU-N) Issue data Prague: CERGE-EI, 2019 ISSN 1211-3298 Series CERGE-EI Working Paper Series Series number 642 Number of pages 52 s. Publication form Print - P Language eng - English Country CZ - Czech Republic Keywords minimum wages ; search and matching ; unemployment Subject RIV AH - Economics OECD category Applied Economics, Econometrics Institutional support NHU-N - RVO:67985998 Annotation This paper explores the notion that minimum wages affect different lowskilled workers aszmmetrically due to productivity differences. In a search model with worker heterogeneity, a rising minimum wage lowers the employment and labor force participation of the least productive workers by pricing them out of the market, while having the opposite effect on other low-skilled workers that remain hirable. CPS data supports these predictions, a rise in the minimum reduces the employment and labor force participation of teenagers with less than high school education, but has the opposite effect on prime-age workers with high school attainment. The calibrated model requires small firm surpluses to match these observations. If firm surplus is small due to high nonmarket activity values, a moderate rise in the minimum improves aggregate welfare even when the worker's bergaining weight is high. Workplace Economics Institute Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2020 Electronic address https://www.cerge-ei.cz/pdf/wp/Wp642.pdf
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