Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure

40 Pages Posted: 6 Apr 2007 Last revised: 12 Jul 2010

See all articles by Harry J. Holzer

Harry J. Holzer

Georgetown University - Public Policy Institute (GPPI); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Lawrence F. Katz

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Alan B. Krueger

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: April 1988

Abstract

This paper uses job applications- data to test the existence of non-competitive, ex-ante rents in the labor market. We first examine whether jobs that pay the legal minimum wage face an excessively of labor as measured by the number of job applications received for the most recent positions filled by the firs. The results indicate that openings for jobs that pay the minimum wage attract significantly more job applications than jobs that pay either more or less than the minimum wage. This spike in the job application rate distribution indicates that ex-ante rents generated for employees by an above market-level minimum wage do not appear to be completely dissipated by employer actions. The second part of the paper uses a similar approach to examine whether jobs in high-wage industries pay above market-clearing wage rates. We find a weak, positive relationship between inter-industry applications differentials and inter-industry wage differentials. In addition, our results indicate that employer size has a sizeable positive effect on the job application rate even after controlling for the wage rate. The paper considers several possible explanations for these findings.

Suggested Citation

Holzer, Harry J. and Katz, Lawrence F. and Krueger, Alan B., Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure (April 1988). NBER Working Paper No. w2561. Available at SSRN: https://ssrn.com/abstract=978756

Harry J. Holzer (Contact Author)

Georgetown University - Public Policy Institute (GPPI) ( email )

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National Bureau of Economic Research (NBER)

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Lawrence F. Katz

Harvard University - Department of Economics ( email )

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HOME PAGE: http://www.economics.harvard.edu/faculty/katz/katz

National Bureau of Economic Research (NBER) ( email )

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Alan B. Krueger

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4046 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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