Labor Market Policies in a Roy-Rosen Bargaining Economy

Author(s)/Creator(s)

Hugo Jales, Syracuse UniversityFollow
Zhengfei Yu, University of Tsukuba

Description/Abstract

We study the effects of labor market policies using a bargaining model featuring compensating differentials (Rosen, 1986) and self-selection (Roy, 1951). The framework allows us to create a taxonomy of formal and informal employment. We use the model to estimate the effects of the minimum wage for the Brazilian economy using the “PNAD" dataset for the years 2001-2005. Our results suggest that, although the minimum wage generates unemployment and reallocation of labor to the informal sector, the policy might be desirable if the employment losses are concentrated in jobs characterized by low surplus.

Document Type

Working Paper

Date

6-2020

Keywords

Self-Selection, Compensating Wage Differentials, Minimum Wage, Informality, Unemployment

Language

English

Series

Working Papers Series

Disciplines

Economic Policy | Economics | Public Affairs, Public Policy and Public Administration

ISSN

1525-3066

Additional Information

Working paper no. 231

Recommended Citation

Jales, Hugo and Yu, Zhengfei, "Labor Market Policies in a Roy-Rosen Bargaining Economy" (2020). Center for Policy Research. 260.
https://surface.syr.edu/cpr/260

Source

Local Input

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.