Central Bank of Nigeria Library

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Minimum wages and on-the-job training /

By: Material type: TextTextSeries: AEI studies | Studies in economic policyPublication details: Washington : American Enterprise Institute for Public Policy Research, c1981.Description: x, 72 pISBN:
  • 0844734284 (pbk.)
Subject(s): DDC classification:
  • 331.2/3 HAS
LOC classification:
  • HD4917 .H38
Online resources: Summary: 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.
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Item type Current library Call number Copy number Status Date due Barcode
Monograph & others Monograph & others CBN HQ Library 331.2'3 HAS (Browse shelf(Opens below)) c.1 Available 31008100227806

Bibliography: p. 69-72.

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.

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