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Author: Acemoglu, Daron
Resulting in 1 citation.
1. Acemoglu, Daron
Pischke, Jorn-Steffen
Minimum Wages and On-the-Job Training
NBER Working Paper No. 7184, National Bureau of Economic Research, June 1999
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Human Capital; Minimum Wage; Skilled Workers; Training, On-the-Job; Wages

Becker's theory of human capital predicts that minimum wages should reduce training investments for affected workers, because they prevent these workers from taking wage cuts necessary to finance training. We show that when the assumption of perfectly competitive labor markets underlying this theory is relaxed, minimum wages can increase training of affected workers, by inducing firms to train their unskilled employees. More generally, a minimum wage increases training for constrained workers, while reducing it for those taking wage cuts to finance their training. We provide new estimates on the impact of the state and federal increases in the minimum wage between 1987 and 1992 of the training of low wage workers. We find no evidence that minimum wages reduce training. These results are consistent with our model, but difficult to reconcile with the standard theory of human capital.
Bibliography Citation
Acemoglu, Daron and Jorn-Steffen Pischke. "Minimum Wages and On-the-Job Training." NBER Working Paper No. 7184, National Bureau of Economic Research, June 1999.