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Search intensity, wage dispersion and the minimum wage

Author

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

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.

Suggested Citation

  • Gautier, Pieter A. & Moraga-González, José L., 2018. "Search intensity, wage dispersion and the minimum wage," Labour Economics, Elsevier, vol. 50(C), pages 80-86.
    • Handle: RePEc:eee:labeco:v:50:y:2018:i:c:p:80-86
    DOI: 10.1016/j.labeco.2017.04.003
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    References listed on IDEAS

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    Cited by:

    1. Panagiotis Nanos, 2023. "Minimum wage spillover effects and social welfare in a model of stochastic job matching," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(4), pages 753-802, August.
    2. Guo, Junjie, 2022. "The persistent impact of multiple offers," Labour Economics, Elsevier, vol. 74(C).
    3. Fernando Almeida & Nelson Amoedo, 2021. "Exploring the association between R&D expenditure and the job quality in the European Union," Papers 2101.03214, arXiv.org.
    4. Rendon, Silvio, 2023. "Wage-Specific Search Intensity," IZA Discussion Papers 15971, Institute of Labor Economics (IZA).
    5. Serdar Birinci & Kurt See & Shu Lin Wee, 2020. "Job Applications and Labor Market Flows," Working Papers 2020-023, Federal Reserve Bank of St. Louis, revised Jan 2023.
    6. Shi, Shouyong, 2023. "Sequentially mixed search and equilibrium price dispersion," Journal of Economic Theory, Elsevier, vol. 213(C).
    7. Guo, Junjie, 2024. "Sequential job posting and equilibrium wage dispersion with bunching," Labour Economics, Elsevier, vol. 87(C).
    8. Dami'an Vergara, 2022. "Minimum Wages and Optimal Redistribution," Papers 2202.00839, arXiv.org, revised Dec 2022.

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