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Adamopoulou, Effrosyni, Francesco Manaresi, Omar Rachedi & Emircan Yurdagul (2024): Minimum wages and insurance within the firm. (ZEW discussion paper 24-021), Mannheim, 66 S.

Abstract

"Minimum wages generate an asymmetric pass-through of firm shocks across workers. We establish this result leveraging employer-employee data on Italian metalmanufacturing firms, which face different wage floors that vary within occupations. In response to negative firm productivity shocks, workers close to the wage floors experience higher job separations but no wage loss. However, the wage of high-paid workers decreases, and more so in firms with higher incidence of minimum wages. A neoclassical model with complementarities across workers with different skills rationalizes these findings. Our results uncover a novel channel that tilts the welfare gains of minimum wages toward low-paid workers." (Author's abstract, IAB-Doku) ((en))

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Ahn, Taehyun (2024): Minimum wage and self-employed business owners: Evidence from South Korea. In: Labour Economics, Jg. 88. DOI:10.1016/j.labeco.2024.102539

Abstract

"This study examines the influences of minimum wage on self-employment exits, using recent changes in the minimum wage level in South Korea. Using the cross-industry variation on the impact of the minimum wage—the proportion of workers whose wages are below the minimum wage in the upcoming year—combined with individual longitudinal data, I estimate the model of self-employment exits. Overall, the estimates show that the minimum wage hike has no significant impact on self-employed workers. However, it increases the likelihood of the business closing for the self-employed who hire employees. The results imply that a ten percent increase in the minimum wage raises the exit probability by 2.6 percentage points, which is 30.9 % of the average exit rate for those with employees. Moreover, the exits are significantly associated with the transition to non-employment." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Alessandrini, Diana & Joniada Milla (2024): Minimum Wage Effects on Human Capital Accumulation: Evidence from Canadian Data. In: Journal of Human Capital, Jg. 18, H. 2, S. 346-376. DOI:10.1086/728084

Abstract

"We investigate the impact of the minimum wage on individuals’ post-secondary schooling decisions. Using Canadian longitudinal data, we explore 136 minimum wage amendments and find three novel results. First, the minimum wage affects both thequantity and type of human capital acquired by students. A 10% increase in the minimum wage increases community-college enrollment by 6.2% but reduces University enrollment by 6.5%. Second, high minimum wages widen the university participation gap between individuals with different levels of parental education. Finally, Minimum wage hikes encourage workers who recently separated from their job to return to post-secondary education as mature students" (Author's abstract, IAB-Doku) ((en))

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Alvarez, Fernando, Robert Shimer & Fabrice Tourre (2024): Unions: Wage floors, seniority rules, and unemployment duration. In: Journal of Economic Dynamics and Control, Jg. 169. DOI:10.1016/j.jedc.2024.104965

Abstract

"This paper examines the impact of unions on unemployment and wages in a dynamic equilibrium search model. We model a union as imposing a minimum wage and rationing jobs to ensure that the union's most senior members are employed. This generates rest unemployment, where following a downturn in their labor market, unionized workers are willing to wait for jobs to reappear rather than search for a new labor market. We characterize the hazard rate of exiting unemployment, and show that it is low at long durations whenever the union-imposed minimum wage is high; we establish that a high union-imposed minimum wage generates a compressed wage distribution and a high turnover rate of jobs —properties consistent with the data. Finally, we show that seniority rules lead to lower unemployment levels, relative to an alternative rule allocating jobs to workers randomly." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Arabzadeh, Hamzeh, Almut Balleer, Britta Gehrke & Ahmet Ali Taskin (2024): Minimum wages, wage dispersion and financial constraints in firms. In: European Economic Review, Jg. 163, 2024-01-14. DOI:10.1016/j.euroecorev.2024.104678

Abstract

"This paper studies how minimum wages affect the wage distribution if firms face financial constraints. Using German employer-employee data and firm balance sheets, we document that the within-firm wage dispersion decreases more with higher minimum wages when firms are financially constrained. We introduce financial frictions into a search and matching labor market model with stochastic job matching, imperfect information, and endogenous effort. In line with the empirical literature, the model predicts that a higher minimum wage reduces hirings and separations. Firms become more selective such that their employment and wage dispersion fall. If effort increases strongly, firms may increase employment at the expense of higher wage dispersion. Financially constrained firms are more selective and reward effort less. As a result, within-firm wage dispersion and employment in these firms fall more with the minimum wage." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Arnadillo, Juan J., Amadeo Fuenmayor & Rafael Granell (2024): The relationship between minimum wage and employment. A synthetic control method approach. In: The Economic and Labour Relations Review, Jg. 35, H. 3, S. 771-791. DOI:10.1017/elr.2024.44

Abstract

"Spain increased its minimum wage (MW) by 22% in 2019. Given the intense debate in the economic literature on the impact of MW increases on the labour market, we conduct an impact assessment of this policy. The synthetic control method will be used to replicate the Spanish labour market by means of a pool of European countries that, in the absence of other reliable measures, simulates the evolution of Spanish employment. This will allow us to identify the causal effect from the increase in the MW. After applying the technique, the increase in the MW is found to have no effect on employment. The results have been subjected to robustness tests such as leave one out or segmentation by gender or age." (Author's abstract, IAB-Doku) ((en))

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Aumayr-Pintar, Christine, Carlos Vacas-Soriano, Jakub Kostolný & Marco Seghesio (2024): Minimum wages in 2024: Annual review. (Eurofound research report / European Foundation for the Improvement of Living and Working Conditions), Dublin, 94 S.

Abstract

"Minimum wages protect workers from unjustified low wages and ensure a level playing field for companies. All EU Member States and Norway have minimum wages in place, albeit in different forms. Among the 27 Member States, 22 have a national minimum wage, with one (or sometimes more than one) rate setting a basic wage floor. In addition, collective agreements are used to further regulate pay and usually set rates above the national minimum wage. In the remaining five Member States and Norway, minimum wages are set in sectorlevel collective agreements, which includes a high coverage of workers in these countries. The 2024 version of this annual review provides an update on minimum wage developments, details how the rates were set and which criteria were used in their adjustment, and maps the influence of EU-level policy on minimum wage setting." (Text excerpt, IAB-Doku) ((en))

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Azar, José, Emiliano Huet-Vaughn, Ioana Marinescu, Bledi Taska & Till von Wachter (2024): Minimum Wage Employment Effects and Labor Market Concentration. In: The Review of Economic Studies, Jg. 91, H. 4, S. 1843-1883. DOI:10.1093/restud/rdad091

Abstract

"This paper shows that more highly concentrated labor markets experience more positive employment effects of the minimum wage. In the most concentrated labor markets, employment rises following a minimum wage increase. The paper establishes its main findings by studying the effects of local minimum wage increases on a key low-wage retail sector, and using data on labor market concentration that covers the entirety of the U.S. with fine spatial variation at the occupation level. The results carry over to the fast-food sector and the entire low-wage labor market and are robust to using proxies of labour market concentration available for a broader range of industries, such as the number of establishments and population density. A model of oligopsonistic competition can explain these effects: there is more room to increase wages in high-concentration areas where wages tend to be further below marginal productivity. These findings provide evidence supporting monopsonistic wage setting as an explanation for the near-zero minimum wage employment effect documented in prior work." (Author's abstract, IAB-Doku) ((en))

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Bezooijen, Emiel van, Wiljan van den Berge & Anna Salomons (2024): The Young Bunch: Youth Minimum Wages and Labor Market Outcomes. In: ILR review, Jg. 77, H. 3, S. 428-460. DOI:10.1177/00197939241239317

Abstract

"The authors estimate the effects of an increase in the youth minimum wage in the Netherlands on low-paid workers’ employment and earnings, using a difference-in-differences approach with detailed administrative data. Findings show that the increase does not have a negative effect on the number of jobs or hours worked, hence raising overall earnings for affected workers. Further, the minimum wage increase has substantial spillover effects, accounting for close to 70% of the average wage increase experienced by workers. While employment grows in fixed-term and temporary help agency contracts, the authors do not find evidence of declines in employment in other types of work arrangements, nor of labor-labor substitution. Labor market outcomes evolve most favorably for full-time incumbent workers who are not enrolled in education and are thus less likely to be transient occupants of minimum wage jobs." (Author's abstract, IAB-Doku) ((en))

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Biewen, Martin & Pascal Erhardt (2024): Using Post-Regularization Distribution Regression to Measure the Effects of a Minimum Wage on Hourly Wages, Hours Worked and Monthly Earnings. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16894), Bonn, 19 S.

Abstract

"We evaluate the distributional effects of a minimum wage introduction based on a data set with a moderate sample size but a large number of potential covariates. Therefore, the selection of relevant control variables at each distributional threshold is crucial to test hypotheses about the impact of the treatment. To this end, we use the post-double selection logistic distribution regression approach proposed by Belloni et al. (2018a), which allows for uniformly valid inference about the target coefficients of our low-dimensional treatment variables across the entire outcome distribution. Our empirical results show that the minimum wage crowded out hourly wages below the minimum threshold, benefitted monthly wages in the lower middle but not the lowest part of the distribution, and did not significantly affect the distribution of hours worked." (Author's abstract, IAB-Doku) ((en))

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Blömer, Maximilian Joseph, Nicole Gürtzgen, Laura Pohlan, Holger Stichnoth & Gerard J. van den Berg (2024): Unemployment effects of the German minimum wage in an equilibrium job search model. In: Labour Economics, Jg. 91, 2024-08-31. DOI:10.1016/j.labeco.2024.102626

Abstract

"We structurally estimate an equilibrium search model using German administrative data and use the model for counterfactual analyses of a uniform minimum wage. The model with worker and firm heterogeneity does not restrict the sign of employment effects a priori; it allows for different job offer arrival rates for the employed and the unemployed and lets firms optimally choose their recruiting intensity. We find that unemployment is a non-monotonic function of the minimum wage level. Effects differ strongly by labor market segment defined by region, skill, and permanent worker ability." (Author's abstract, IAB-Doku, © Elsevier) ((en))

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Bossler, Mario, Ying Liang & Thorsten Schank (2024): The Devil is in the Details: Heterogeneous Effects of the German Minimum Wage on Working Hours and Minijobs. (arXiv papers 2403.17206), 79 S. DOI:10.48550/arXiv.2403.17206

Abstract

"In 2015, Germany introduced a national minimum wage. While the literature agrees on at most limited negative effects on the overall employment level, we go into detail and analyze the impact on the working hours dimension and on the subset of minijobs. Using data from the German Structure of Earnings Survey in 2010, 2014, and 2018, we find empirical evidence that the minimum wage significantly reduces inequality in hourly and monthly wages. While various theoretical mechanisms suggest a reduction in working hours, these remain unchanged on average. However, minijobbers experience a notable reduction in working hours which can be linked to the specific institutional framework. Regarding employment, the results show no effects for regular jobs, but there is a noteworthy decline in minijobs, driven by transitions to regular employment and non-employment. The transitions in non-employment imply a wage elasticity of employment of $-0.1$ for minijobs. Our findings highlight that the institutional setting leads to heterogeneous effects of the minimum wage." (Author's abstract, IAB-Doku) ((en))

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Bossler, Mario & Bernd Fitzenberger (2024): Hat die Einführung des gesetzlichen Mindestlohns in Deutschland zu einem Rückgang der Beschäftigung geführt? In: A. Wambach, R. Riphahn, F. Breyer, K. Schmidt & G. Weizsäcker (Hrsg.) (2024): Wirtschaft verstehen, Zukunft gestalten, S. 112-119, 2024-03-26.

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Bossler, Mario, Lars Chittka & Thorsten Schank (2024): A 22 percent increase in the German minimum wage: nothing crazy! (arXiv papers 2405.12608), 52 S. DOI:10.48550/arXiv.2405.12608

Abstract

"We present the first empirical evidence on the 22 percent increase in the German minimum wage, implemented in 2022, raising it from Euro 9.82 to 10.45 in July and to Euro 12 in October. Leveraging the German Earnings Survey, a large and novel data source comprising around 8 million employee-level observations reported by employers each month, we apply a difference-in-difference-in-differences approach to analyze the policy's impact on hourly wages, monthly earnings, employment, and working hours. Our findings reveal significant positive effects on wages, affirming the policy's intended benefits for low-wage workers. Interestingly, we identify a negative effect on working hours, mainly driven by minijobbers. The hours effect results in an implied labor demand elasticity in terms of the employment volume of -0.17 which only partially offsets the monthly wage gains. We neither observe a negative effect on the individual's employment retention nor the regional employment levels." (Author's abstract, IAB-Doku) ((en))

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Börschlein, Erik-Benjamin & André Diegmann (2024): 14 Euro Mindestlohn: Rund ein Fünftel der Betriebe erwartet einen Beschäftigungsrückgang. In: IAB-Forum H. 21.10.2024. DOI:10.48720/IAB.FOO.20241021.01

Abstract

"Auf die Erhöhung des Mindestlohns auf 12 Euro im Oktober 2022 haben rund 30 Prozent der Betriebe in Deutschland mit Lohnerhöhungen reagiert. Eine weitere Anhebung des Mindestlohns auf 14 Euro könnte mehr als jeden zweiten Betrieb betreffen. Etwa ein Drittel der Betriebe, die direkt davon betroffen wären, geht davon aus, innerhalb der kommenden zwölf Monate Beschäftigung abbauen zu müssen." (Autorenreferat, IAB-Doku)

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Chen, Jiwei & Zhigang Xu (2024): Can minimum wage increases narrow the gender wage gap? Evidence from China. In: Applied Economics, S. 1-19. DOI:10.1080/00036846.2024.2402953

Abstract

"Using data from the 2011–2019 China Household Finance Survey (CHFS), this paper examines the effect of minimum wage increases on the gender wage gap. The results show that minimum wage increases can significantly reduce the gender wage gap. We further examine the impact of minimum wages on the gender wage gap across the wage distribution and find that minimum wages are conducive to narrowing the gender wage gap at the bottom and middle parts of the wage distribution, but not conducive to reducing the gender wage gap at the upper part of the wage distribution. We also identity heterogeneous effects of minimum wages on the gender wage gap across age, education level, hukou, and work unit. Finally, we find that minimum wages have a negative effect on low-wage workers’ employment. Therefore, governments need to weigh their role in reducing the gender wage gap against the potential negative employment effects when adjusting the minimum wage standard." (Author's abstract, IAB-Doku) ((en))

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Danziger, Eliav & Leif Danziger (2024): A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16846), Bonn, 21 S., Anhänge.

Abstract

"This paper explores how a minimum wage affects a firm's behavior with a competitive labor market and an uncertain export cost. The model provides several novel insights which are consistent with recent empirical evidence. Thus, a minimum wage increases an exporter's foreign-market size and may cause a non-exporter to start exporting. The foreign-market size may increase so much that, although the home-market size decreases, the overall firm size increases." (Author's abstract, IAB-Doku) ((en))

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Dao, Ngoc (2024): Federal minimum wage expansion to homecare workers: Employment and income effects. In: Labour Economics, Jg. 87. DOI:10.1016/j.labeco.2024.102511

Abstract

"The rapid growth of the home care industry coincides with increases in the proportion of the population over 65 years of age and more likely to need assistance with basic daily activities due to illness or disability. Yet, the growth in home care use has been accompanied by concerns about the quality of the care provided. Higher wages and better legal protection might improve the quality of home health care services. This study examines the 2013 Home Care Rule promulgated by the Department of Labor, which added home care workers to the groups covered under the federal minimum wage with minimum hourly and overtime rates. The results show large effects (7–9 %) on part-time employment increase, small effects on work hour reduction (by 2–4 %), and nonnegative effect on overall employment level following the expansion. Despite the decline in hours worked, there is no negative impact on earnings among homecare workers." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Derenoncourt, Ellora & David Weil (2024): Voluntary Minimum Wages. (NBER working paper / National Bureau of Economic Research 32546), Cambridge, Mass, 90 S.

Abstract

"Recent wage growth at the bottom of the earnings distribution in the U.S. has reversed a decades-long trend of widening wage inequality. Numerous state and local minimum wage increases have overtaken an effectively non-binding federal minimum, and robust labor demand in the post-pandemic recovery drove wage growth in the low-wage sector. An increasingly pervasive phenomenon over this same period (2014-2023) is the use of company-wide, voluntary minimum wages (VMWs) by private employers, including some of the largest U.S. retailers. We use anonymized payroll data for thousands of firms collected by a major credit bureau to study the effects of these policies on large retailers' own wages and employment, as well as spillover effects onto other employers in shared labor markets, variously defined. Using stacked event studies centered around multiple VMW events and a continuous treatment variable defined as the gap between local area wages and the company minimum, we find that VMWs result in sizable wage increases and reductions in turnover at the companies that implemented them. Turning to wages at other companies, including those connected to the large retailer by worker flows, we estimate precise, economically negligible spillover effects. Despite the decline in separations from companies with voluntary minimums, overall hiring rates at connected employers do not decline, consistent with substitutability across new hires. Although voluntary minimum wage policies have affected over 3 million jobs among the largest retailers, their impact on the broader labor market is limited." (Author's abstract, IAB-Doku) ((en))

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Devereux, Kevin & Zuzanna Studnicka (2024): Non-monotonic employment effects by market structure and minimum wage level. (CLEF working paper series / Canadian Labour Economics Forum 66), Waterloo, ON, 62 S.

Abstract

"Minimum wages decrease employment in competitive markets, but can increase it in monopsonistic markets so long as they do not exceed the marginal product of labor. We find evidence of non-monotonicity both by market structure and minimum wage level. Minimum wage hikes initially increase hours worked for minimum wage workers (MWWs) in high-concentration local labor markets (LLMs), while increasing job loss likelihood for MWWs in low-concentration LLMs. Repeated hikes reverse initial hours gains, and may increase job loss. Non-MWWs show economically negligible responses throughout. Observing minimum wage status allows for both within- and across-market difference-in-difference designs, whose findings provide mutual support. We combine these into a triple-difference specification. Our results help to resolve the lack of consensus around the sign of the minimum wage's employment effects." (Author's abstract, IAB-Doku) ((en))