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Schooling, Training, Growth and Minimum Wages
Author(s) -
Ravn Morten O.,
Sørensen Jan Rose
Publication year - 1999
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00165
Subject(s) - economics , minimum wage , wage growth , labour economics , productivity , training (meteorology) , distortion (music) , efficiency wage , legislation , growth model , wage , macroeconomics , amplifier , physics , cmos , electronic engineering , meteorology , engineering , political science , law
We examine how the long‐run growth performance of an economy is affected by a labor market distortion. In our model, growth occurs through skill formation, and skills are generated through schooling and training of unskilled workers. We analyze how a minimum wage legislation affects long‐run growth. In general, the effects are ambiguous. The reason is that while a minimum wage discourages training, it also encourages schooling. The net effect then depends on whether training or schooling dominates the long‐run increases in labor productivity. JEL classification : I 20, J 31, O 40