Do Frictions Matter in the Labor Market?Accessions, Separations and Minimum Wage Effects

We measure labor market frictions using a strategy that bridges design-based and structuralapproaches: estimating an equilibrium search model using reduced-form minimum wageelasticities identified from border discontinuities and fitted with Bayesian and LIML methods.We begin by providing the first test of U.S. minimum wage effects on labor market flows andfind negative effects on employment flows, but not levels. Separations and accessions fallamong restaurants and teens, especially those with low tenure. Our estimated parameters ofa search model with wage posting and heterogeneous workers and firms imply that frictionshelp explain minimum wage effects...