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

Mark F. Owens; John H. Kagel

doi:10.1016/j.jebo.2009.12.002

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

Mark F. Owens
, John H. Kagel

Black School of Business (Behrend)

Research output: Contribution to journal › Article › peer-review

34 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 language	English (US)
Pages (from-to)	317-326
Number of pages	10
Journal	Journal of Economic Behavior and Organization
Volume	73
Issue number	3
DOIs	https://doi.org/10.1016/j.jebo.2009.12.002
State	Published - Mar 2010

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

All Science Journal Classification (ASJC) codes

Economics and Econometrics
Organizational Behavior and Human Resource Management

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10.1016/j.jebo.2009.12.002

Cite this

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title = "Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation",

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.",

author = "Owens, \{Mark F.\} and Kagel, \{John H.\}",

note = "Funding Information: Research has been partially supported by grants from the National Science Foundation and Jones College of Business at Middle Tennessee State University. We thank various colleagues and seminar participants for helpful suggestions along with the comments of two referees and a co-editor of this Journal. We also thank Susan Rose, John Lightle and Adam Hogan for their help in conducting experiments. Any opinions, findings, and conclusions or recommendations in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation. ",

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

Abstract

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