Getting Handcuffs on an Octopus: Minimum Wages, Employment, and Turnover

51 Pages Posted: 16 Mar 2013 Last revised: 15 Aug 2014

See all articles by R. Kaj Gittings

R. Kaj Gittings

Texas Tech University - Department of Economics

Ian M. Schmutte

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Date Written: January 30, 2014

Abstract

Theoretical work on minimum wage policy emphasizes labor market dynamics, but the resulting implications for worker mobility remain largely untested. We show that in the teenage labor market minimum wages reduce worker flows and increase job stability. Furthermore, we find that the employment effects of the minimum wage vary considerably across markets that exhibit different degrees of labor market tightness. Our results help explain the small effects of minimum wages on employment commonly found in the aggregate data and are consistent with labor market involving search frictions.

Keywords: Minimum Wage, Job Flows, Turnover, Unemployment

JEL Classification: J38, J39, J63, J64, J68, E24

Suggested Citation

Gittings, R. Kaj and Schmutte, Ian M., Getting Handcuffs on an Octopus: Minimum Wages, Employment, and Turnover (January 30, 2014). Available at SSRN: https://ssrn.com/abstract=2234118 or http://dx.doi.org/10.2139/ssrn.2234118

R. Kaj Gittings

Texas Tech University - Department of Economics ( email )

Lubbock, TX 79409-2101
United States

Ian M. Schmutte (Contact Author)

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

HOME PAGE: http://people.terry.uga.edu/schmutte/

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