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Allocating Jobs under a Minimum Wage: Queues vs. Lotteries

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  • IRA N. GANG
  • EDWARD TOWER

Abstract

In this paper we provide a simple diagrammatic technique for incorporating variable labour supply into the specific factors model We then use the framework to analyze the positive and normative effects of a minimum wage both with a broadly based employment lottery (on‐the‐job search) and with an employment queue (the Harris‐Todaro case). We discover that with a given minimum wage replacing the queue with a lottery may be welfare reducing.

Suggested Citation

  • Ira N. Gang & Edward Tower, 1990. "Allocating Jobs under a Minimum Wage: Queues vs. Lotteries," The Economic Record, The Economic Society of Australia, vol. 66(3), pages 186-194, September.
    • Handle: RePEc:bla:ecorec:v:66:y:1990:i:3:p:186-194
    DOI: 10.1111/j.1475-4932.1990.tb01721.x
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    References listed on IDEAS

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    1. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
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    3. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 87-104, August.
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    5. Welch, Finis, 1974. "Minimum Wage Legislation in the United States," Economic Inquiry, Western Economic Association International, vol. 12(3), pages 285-318, September.
    6. Stahl, Dale II & Alexeev, Michael, 1985. "The influence of black markets on a queue-rationed centrally planned economy," Journal of Economic Theory, Elsevier, vol. 35(2), pages 234-250, August.
    7. Gang, Ira N & Gangopadhyay, Shubhashis, 1987. "Optimal Policies in a Dual Economy with Open Unemployment and Surplus Labour," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 378-387, June.
    8. John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
    9. Bhatia, Kul B, 1979. "Rural-Urban Migration and Surplus Labour," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 403-414, November.
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    Cited by:

    1. Ira N. Gang & Myeong-Su Yun, 2007. "Immigration Amnesty and Immigrant's Earnings," Research in Labor Economics, in: Immigration, pages 273-309, Emerald Group Publishing Limited.
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    3. Omer Gokcekus & Edward Tower, 2003. "An Efficiency Enhancing Minimum Wage," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(4), pages 247-259.
    4. Jiménez Martínez, Mónica & Jiménez Martínez, Maribel, 2021. "Are the effects of minimum wage on the labour market the same across countries? A meta-analysis spanning a century," Economic Systems, Elsevier, vol. 45(1).

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