Wage differentiation and long-term unemployment

Abstract

"This paper presents an international analysis of the share of long-term unemployed of all unemployed for a number of industrial countries in the period 1985-1991. After allowing for the differences in the systems for payments to replace wages, wage negotiations and the level of activity of labour market policy the comparison reveals that a larger wage disparity (i.e. a lower first decile ratio of the distribution of incomes) reduces long-term unemployment. This result contradicts empirical studies from the USA which could not find any negative employment effect after the increase of minimum wages in the late eighties and early nineties. Thus the international comparative study confirms the neo-classical standard model of the labour market with perfect competition." (Author's abstract, IAB-Doku) ((en))

Cite article

Bellmann, L. (1996): Wage differentiation and long-term unemployment. An international comparison. In: IAB Labour Market Research Topics No. 19, p. 1-15.