Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation

Mark F. Owens, John H. Kagel

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

A minimum wage raises average wages along with modest increases in employees' average effort levels, generating a Pareto improvement in social welfare. The minimum wage reduces effort in the neighborhood of the minimum, but has no systematic effect on effort levels at higher wages. As a consequence average effort increases modestly with a minimum wage as it raises average wages. Similar results are reported within groups, both when introducing and eliminating a minimum wage, although the within group effects of introducing a minimum wage are stronger than dropping it.

Original languageEnglish (US)
Pages (from-to)317-326
Number of pages10
JournalJournal of Economic Behavior and Organization
Volume73
Issue number3
DOIs
StatePublished - Mar 2010

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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