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Title: Routinization and the Decline of the U.S. Minimum Wage

Citation Type: Working Paper

Publication Year: 2014

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Abstract: The U.S. minimum wage declined in real terms since the late 1970s. In the same time, the wage of the least skilled workers fell in real terms, while the wage of the highest skilled workers increased. To shed light on these issues, I use a simple model of routinization. High-ability workers receiving additional education, can substitute low-ability workers receiving additional education and in a declining wage for low-ability workers. A government opposes both unemployment and wage inequality. I calibrate the model and show that technical progress induces the government to lower the minimum wage. Hence, the model contributes to understand the decline in the U.S. minimum wage.

Url: http://www.uni-konstanz.de/FuF/wiwi/workingpaperseries/WP_16_Martensen_2014.pdf

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Authors: Martensen, Finn

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Publication Number: 16

Institution: University of Konstanz

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Publisher Location: Baden-Wrttemberg, Germany

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Other

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