Working Paper: NBER ID: w2561
Authors: Harry J. Holzer; Lawrence F. Katz; Alan B. Krueger
Abstract: This paper uses job applications- data to test the existence of non-competitive, ex-ante rents in the labor market. We first examine whether jobs that pay the legal minimum wage face an excessively of labor as measured by the number of job applications received for the most recent positions filled by the firs. The results indicate that openings for jobs that pay the minimum wage attract significantly more job applications than jobs that pay either more or less than the minimum wage. This spike in the job application rate distribution indicates that ex-ante rents generated for employees by an above market-level minimum wage do not appear to be completely dissipated by employer actions. The second part of the paper uses a similar approach to examine whether jobs in high-wage industries pay above market-clearing wage rates. We find a weak, positive relationship between inter-industry applications differentials and inter-industry wage differentials. In addition, our results indicate that employer size has a sizeable positive effect on the job application rate even after controlling for the wage rate. The paper considers several possible explanations for these findings.
Keywords: minimum wage; job queues; wages; labor market
JEL Codes: J23; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage (J38) | number of job applications (J68) |
| high-wage industries (J39) | number of job applications (J68) |