Participation, Recruitment Selection, and the Minimum Wage

Frederic Gavrel (1, 2)

1 CREM - Centre de recherche en économie et management
2 TEPP - Travail, Emploi et Politiques Publiques

This paper reexamines the e ciency of participation with heterogeneous workers in a search-matching model with bargained wages and free entry. As- suming that rms hire their best applicants, we state that participation is insu cient whatever workers' bargaining strengths. The reason for this is that, when holding a job, the marginal participant should receive the entire output. As a consequence, introducing a (small) minimum wage raises participation, job creation, and employment. Therefore the aggregate income of the economy is enhanced.

Mots clés: heterogeneous workers; participation; search and maching; applicant ranking; efficiency; minimum wage

Domaines: Economies et finances

Frederic Gavrel. Participation, Recruitment Selection, and the Minimum Wage. 2014. ⟨halshs-00972289⟩