The Minimum Wage from a Two-Sided Perspective

10 Pages Posted: 9 Jul 2014

See all articles by Alessio J.G. Brown

Alessio J.G. Brown

Kiel Institute for the World Economy

Christian Merkl

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg; IZA Institute of Labor Economics

Dennis J. Snower

University of Kiel - Institute for World Economics (IfW); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: June 25, 2014

Abstract

This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms’ job offer and workers’ job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show that sufficiently low minimum wages may do no harm to employment, since their job-offer disincentives are countervailed by their job-acceptance incentives.

Keywords: minimum wage, labor market, employment, unemployment, job offer, job acceptance

JEL Classification: J30, J60, J20

Suggested Citation

Brown, Alessio J.G. and Merkl, Christian and Snower, Dennis J., The Minimum Wage from a Two-Sided Perspective (June 25, 2014). CESifo Working Paper Series No. 4868, Available at SSRN: https://ssrn.com/abstract=2463624 or http://dx.doi.org/10.2139/ssrn.2463624

Alessio J.G. Brown

Kiel Institute for the World Economy ( email )

D-24105 Kiel, Schleswig-Hosltein
Germany
+49 431 8814 259 (Phone)
+49 431 8814 501 (Fax)

HOME PAGE: http://www.ifw-kiel.de/

Christian Merkl (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Schloßplatz 4
Erlangen, DE Bavaria 91054
Germany

IZA Institute of Labor Economics ( email )

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

Dennis J. Snower

University of Kiel - Institute for World Economics (IfW) ( email )

Duesternbrooker Weg 120
D-24118 Kiel
Germany
+49+431-8814-235 (Phone)

Institute for the Study of Labor (IZA)

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

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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