Dual Labor Markets and the Impact of Minimum Wages on Atypical Employment

20 Pages Posted: 7 Jun 2011

See all articles by Peter Flaschel

Peter Flaschel

Bielefeld University - Department of Business Administration and Economics

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics

Date Written: July 2011

Abstract

We present a growth model that contains minimum wages as one important element of a flexicurity economy where we allow for heterogeneous labor and for real wage rigidities. We show that the wage‚Äźsetting process, in its reference to the reservation wage of the first labor market, is crucial as regards stability of the economy and persistent or explosive oscillations may occur, in particular when the influence of the reservation wage on wage formation in the first labor market becomes too strong. Further, minimum wages can alleviate the negative consequences of economic downturns and help stabilize the economy.

Suggested Citation

Flaschel, Peter and Greiner, Alfred, Dual Labor Markets and the Impact of Minimum Wages on Atypical Employment (July 2011). Metroeconomica, Vol. 62, Issue 3, pp. 512-531, 2011, Available at SSRN: https://ssrn.com/abstract=1859126 or http://dx.doi.org/10.1111/j.1467-999X.2011.04122.x

Peter Flaschel (Contact Author)

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
Bielefeld, 33501
Germany
+49 521 106 4859 (Phone)
+49 521 106 67120 (Fax)

HOME PAGE: http://phoenix.wiwi.uni-bielefeld.de/lehrbereiche/vwl/wipol

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