Getting handcuffs on an octopus: Minimum wages, employment, and turnover

R. Kaj Gittings, Ian M. Schmutte

Research output: Contribution to journalReview article

14 Scopus citations

Abstract

Theoretical work on minimum wage policy emphasizes labor market dynamics, but the resulting implications for worker mobility remain largely untested. The authors show that in the teenage labor market, higher minimum wage standards reduce worker flows and increase job stability. Furthermore, they find that the employment effects of a relatively higher minimum wage vary considerably across markets with different levels of turnover and labor market tightness. Results help to explain the small effects of minimum wage standards on employment commonly found in the aggregate data and are consistent with labor market models that involve search frictions.

Original languageEnglish
Pages (from-to)1133-1170
Number of pages38
JournalIndustrial and Labor Relations Review
Volume69
Issue number5
DOIs
StatePublished - 2016

Keywords

  • Job flows
  • Minimum wage
  • Turnover
  • Unemployment

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