Search intensity, wage dispersion and the minimum wage

Pieter A. Gautier*, José L. Moraga-González

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

84 Downloads (Pure)

Abstract

We study a labor market where employers post wages and workers simultaneously choose the number of applications they send out. Firms offer the job to a worker at random; workers with multiple offers pick the best one. If the application costs are sufficiently low, workers contact multiple firms and there is wage dispersion in equilibrium. The number of applications workers send out is excessive from a welfare perspective due to a rent seeking externality. A mandatory minimum wage increases the mean and reduces the variance of the wage distribution. The net effect on welfare is ambiguous.

Original languageEnglish
Pages (from-to)80-86
Number of pages7
JournalLabour Economics
Volume50
Early online date28 Apr 2017
DOIs
Publication statusPublished - Mar 2018

Keywords

  • Minimum wage
  • Search intensity
  • Wage dispersion

Fingerprint

Dive into the research topics of 'Search intensity, wage dispersion and the minimum wage'. Together they form a unique fingerprint.

Cite this