The minimum wage in an adverse selection economy

被引:2
|
作者
Sampson, AA [1 ]
Simmons, R [1 ]
机构
[1] Univ Salford, Sch Accounting Econ & Management, Salford M5 4WT, Lancs, England
来源
OXFORD ECONOMIC PAPERS-NEW SERIES | 2002年 / 54卷 / 01期
关键词
D O I
10.1093/oep/54.1.150
中图分类号
F [经济];
学科分类号
02 ;
摘要
This paper examines the welfare implications of minimum wage legislation in a simple two-sector model, in which greater effort is required to produce in the higher productivity sector and individual ability is private. An adverse selection distortion arises so that, without a minimum wage, too many workers work in the primary sector because of the high wage based on average ability. These workers produce relatively little, while exerting effort. The paper shows that a minimum wage, in the low-productivity sector, can correct this distortion but may lower welfare.
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页码:150 / 159
页数:10
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