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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
An Equilibrium Analysis of Labor Market Policies: Theory and Estimation.

An Equilibrium Analysis of Labor Market Policies: Theory and Estimation.

Silva Cassorla, Carolina Andrea

Paperback

Economics

Currently unavailable to order

ISBN10: 1243715219
ISBN13: 9781243715210
Publisher: Proquest Umi Dissertation Pub
Pages: 124
Weight: 0.52
Height: 0.26 Width: 7.44 Depth: 9.69
Language: English
We introduce a minimum wage and severance payments in an equilibrium model of a labor market where the matching of workers and firms is a timely and costly process. We study how these policies affect the decision-making in our model, such as decisions regarding the creation and destruction of jobs by firms. We structurally estimate the model's parameters, and with the resulting estimates we perform a quantitative welfare analysis. We reach three main conclusions. First, when the dispersion in wages is low and the share that workers receive from the surplus their job generates has the correct level, the economy's maximum welfare level is reached in a policy-free environment: on the other hand, if the workers' share is too low, the maximum level of welfare can be attained using any of the following three possibilities: severance payments or a minimum wage by themselves or with an appropriate combination of these two policies. Second, as dispersion in wages increases, the minimum wage, by itself, can no longer reach the economy's maximum level of welfare. Third, when the dispersion in wages is high enough, no policy in isolation can attain the economy's maximum level of welfare, and a particular combination of labor market policies is required. Additionally, in this case, there is no level of the workers' share that attain such level of welfare in a policy-free environment. In the last Chapter we perform an empirical study of the minimum wage welfare effects on the Chilean market using Flinn's [16] framework. We structurally estimate the model for different levels of the workers' share and perform the welfare analysis for each set of parameters. A first result is that the optimal minimum wage is decreasing in the workers' share. Secondly, for all values of the share, the change in the participation rate accounts for more than half of the welfare gain induced by the optimal minimum wage. Thirdly, as the workers' share increases, the gap between the planner's welfare and the equilibrium one becomes more significant and the optimal minimum wage becomes less effective, closing a smaller fraction of this gap.

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