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Allocating Jobs under a Minimum Wage: Queues vs. Lotteries *
Author(s) -
GANG IRA N.,
TOWER EDWARD
Publication year - 1990
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1990.tb01721.x
Subject(s) - lottery , queue , economics , normative , welfare , labour economics , wage , simple (philosophy) , variable (mathematics) , microeconomics , computer science , mathematics , market economy , mathematical analysis , philosophy , epistemology , programming language
In this paper we provide a simple diagrammatic technique for incorporating variable labour supply into the specific factors model We then use the framework to analyze the positive and normative effects of a minimum wage both with a broadly based employment lottery (on‐the‐job search) and with an employment queue (the Harris‐Todaro case). We discover that with a given minimum wage replacing the queue with a lottery may be welfare reducing.