Labor Market Policies in a Sector Specific Search Model with Heterogeneous Firms and Workers

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Keywords:

unemployment benefits, minimum wage, search and matching models, job composition, welfare

Abstract

This paper analyzes the effects of unemployment benefits and minimum wage policies in a noncompetitive labor market with two sectors, two types of workers and sector specific search. It finds that those policies can shift the job composition towards low-wage jobs and that they will never increase the number of high‑wage jobs. Welfare can only increase because of reduced social vacancy creation costs. The paper is an extension of Acemoglu (2001) who finds in the homogeneous‑worker random search version of the model that the mentioned labor market policies can shift the job composition toward high‑wage jobs, increase the number of high‑wage jobs and welfare.

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References

Acemoglu, D. (2001). Good jobs versus bad jobs. Journal of Labor Economics, 19(1), 1–21. https://doi.org/10.1086/209978

Albrecht, J., & Vroman, S. (2002). A MATCHING MODEL WITH ENDOGENOUS SKILL REQUIREMENTS>*. International Economic Review, 43(1), 283–305. https://doi.org/10.1111/1468-2354.t01-1-00012

Cahuc, P., Postel-Vinay, F., & Robin, J. M. (2006). Wage bargaining with on-the-Job search: Theory and evidence. Econometrica, 74(2), 323–364. https://doi.org/10.1111/j.1468-0262.2006.00665.x

Dolado, J., Jansen, M., & Jimeno, J. (2003). On-the-Job search in a match­ing model with heterogeneous jobs and workers. IZA Discussion Paper Nº 886.

Pissarides, C. (2000). Equilibrium unemployment theory. Second Edition, Basil Blackwell, Oxford. labor market policies in a sector specific search….

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Published

2007-10-31

How to Cite

Navarro, L. (2007). Labor Market Policies in a Sector Specific Search Model with Heterogeneous Firms and Workers. Economic Analysis Review, 22(2), 29–45. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/71

Issue

Vol. 22 No. 2 (2007)

Section

Articles

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Copyright (c) 2007 Lucas Navarro

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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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