Labor Market Institutions and Economic Mobility

Research Report

Labor Market Institutions and Economic Mobility

April 3, 2008

Abstract

Labor market institutions like unions and minimum wage laws represent some of the most direct levers available to a policymaker with a mobility-focused agenda. Both have the potential to increase absolute mobility by ensuring that lower- and middle-income workers receive a slice of the economic pie. At the same time, however, unions and minimum wage laws can lead to labor market rigidities that make it more difficult for people to move up the economic ladder. This review summarizes the complex and controversial research on the tradeoffs inherent in changes in minimum wage laws and unionization levels. (Review 8 of 11.)

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