. Multiple equilibria and minimum wages in labor markets with informational frictions and heterogeneous production technologies
 G. J. van den Berg, Institute for the Study of Labor, Bonn, IZA discussion paper, n° 806, June, 35 p., (2003).

Résumé - Summary
 It is often argued that a mandatory minimum wage is binding only if the wage density displays a spike at it. In this paper we analyze a model with search frictions and heterogeneous production technologies, in which imposition of a minimum wage affects wages even though, after imposition, the lowest wage in the market exceeds the minimum wage. The model has multiple equilibria as a result of the fact that the reservation wage of the unemployed and the lowest production technology in use affect each other. Imposition of a minimum wage may improve social welfare.