Abstract
This article examines the long-run consequences of minimum wage regulation within the framework of a two-labor-sector growth model, where a minimum real wage is effective only in the “unskilled” labor sector. The assumption of heterogeneous labor makes possible a stable steady-state growth equilibrium. Conditions for the stability and existence of steady-state equilibrium are presented. A significant implication of the model is that selective immigration policies that encourage the influx of skilled workers would have the long-run effect of increasing the employment rate of unskilled labor, even in cases where the two labor sectors are nearly perfect substitutes.
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Robinson, W.D. Labor composition and long-run employment in a minimum-wage economy. J Econ Finan 17, 119–130 (1993). https://doi.org/10.1007/BF02920643
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DOI: https://doi.org/10.1007/BF02920643