TY  - RPRT
        AU  - Berg, Gerard J. van den
        TI  - Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies
        PY  - 2003/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 806
        UR  - https://www.iza.org/index.php/publications/dp806
        AB  - It is often argued that a mandatory minimum wage is binding only if the wage density displays
a spike at it. In this paper we analyze a model with search frictions and heterogeneous
production technologies, in which imposition of a minimum wage affects wages even though,
after imposition, the lowest wage in the market exceeds the minimum wage. The model has
multiple equilibria as a result of the fact that the reservation wage of the unemployed and the
lowest production technology in use affect each other. Imposition of a minimum wage may
improve social welfare.
        KW  - matching
KW  - productivity
KW  - job search
KW  - unemployment
KW  - imperfect information
KW  - equilibrium
KW  - labor market policy
KW  - wages
KW  - congestion
        ER  -