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Pedersen, Siri Hansen & Georg Picot (2023): Regulating low wages: cross-national policy variation and outcomes. In: Socio-economic review, Jg. 21, H. 4, S. 2093-2116. DOI:10.1093/ser/mwad019

Abstract

"This article provides a comparative analysis of three central policies to regulate low wages: statutory minimum wages, state support for collective bargaining and topping up low wages with public transfers (in-work benefits). We map the variation of these policies across 33 OECD countries and analyze the incidence of low-wage employment they are associated with. We find three approaches to regulating low wages. In the first, 'wage scale protection', states put most emphasis on supporting collective bargaining. In the second, 'bare minimum', there is not much else than the statutory minimum wage. In the third, 'state pay', the statutory minimum wage is supplemented by sizeable public financial support for low earners. When analyzing policy outcomes, 'wage scale protection' is associated with least low-wage employment. For 'bare minimum', much depends on the level of the statutory minimum wage. Although 'state pay' props up workers' disposable income, many workers receive low gross pay." (Author's abstract, IAB-Doku) ((en))

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Schmillen, Achim, Michael Stops & Dewen Wang (2023): The Determinants of China's Minimum Wage Rates. In: China & World Economy, Jg. 31, H. 3, S. 59-91., 2023-02-12. DOI:10.1111/cwe.12489

Abstract

"We use a highly disaggregated panel of macro data and minimum wages at the county level to investigate the processes behind minimum wage adjustments in China. Relying on random effects models, spatial econometrics techniques, and multilevel analyses, we document that a comparatively small number of economic variables – including the local price level and GDP per capita – are important determinants of minimum wage rates. Interactions between adjacent counties and counties of the same administrative type, and centralized mechanisms, particularly at the provincial level, also play an important role in explaining the variance in minimum wage rates across counties. Finally, we show that China's provinces are the key players for setting minimum wage rates and that, when they do so, they are not uniform in the way they weigh different economic variables." (Author's abstract, IAB-Doku, © Wiley) ((en))

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Taylor, Garrett C. & James E. West (2023): Minimum Wage Effects Within Census Based Statistical Areas: A Matched Pair Cross-Border Analysis. (NBER working paper / National Bureau of Economic Research 31196), Cambridge, Mass, 14 S.

Abstract

"Using monthly data from major U.S. metropolitan areas that span state borders, we estimate the elasticity of employment with respect to the minimum wage using a difference-in-differences design with continuous treatment in two-digit industries of 71 (Arts, Entertainment and Recreation) and 72 (Accommodation and Food Services). In specifications that control for differences in state sales, personal and corporate income tax rates, we find negative average causal response on the treated (ACRT) in six-digit industries where we expect large numbers of young, entry-level employees, but positive correlations in other industries. Our results illustrate important heterogeneities in minimum wage effects in urban versus rural areas." (Author's abstract, IAB-Doku) ((en))

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Taylor, Garrett C. & James E. West (2023): Minimum wage effects within Census Based Statistical Areas: A matched pair cross-border analysis. In: Economics Letters, Jg. 229. DOI:10.1016/j.econlet.2023.111220

Abstract

"Using monthly data from major U.S. metropolitan areas that span state borders, we estimate the elasticity of employment with respect to the minimum wage using a difference-in-differences design with continuous treatment in two-digit industries of 71 (Arts, Entertainment and Recreation) and 72 (Accommodation and Food Services). In specifications that control for differences in state sales, personal and corporate income tax rates, we find a negative average causal response on the treated (ACRT) in six-digit industries where we expect large numbers of young, entry-level employees but positive correlations in other industries. Our results illustrate important heterogeneities in minimum wage effects in urban versus rural areas." (Author's abstract, IAB-Doku, © 2023 Elsevier) ((en))

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Viotto, Regina (2023): Neue europäische Richtlinie zu Mindestlöhnen und Tarifbindung. (Hans-Böckler-Stiftung. Working paper Forschungsförderung 292), Düsseldorf, 44 S.

Abstract

"Der vorliegende Beitrag beschäftigt sich mit der im November 2022 in Kraft getretenen europäischen Mindestlohnrichtlinie, die einen Meilenstein in der europäischen Gesetzgebung darstellt. Es handelt sich um die erste EU-Rechtsvorschrift, die direkt die Erhöhung von gesetzlichen Mindestlöhnen und die Stärkung der nationalen Tarifvertragssysteme bezweckt. Insofern stellt sie nicht weniger als einen Paradigmenwechsel hin zu einem sozialen Europa dar. Ziele des Aufsatzes sind es, die wesentlichen Inhalte der Richtlinie darzustellen, juristisch zu prüfen, politisch zu bewerten und in einen Kontext zur bisherigen EU-Rechtsprechung und -politik zu setzen." (Autorenreferat, IAB-Doku)

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Winters, Jutta; Alan Manning (interviewte Person) (2023): Alan Manning: "It is important to have institutions such as the minimum wage to adress the market power of employers" (Interview). In: IAB-Forum H. 05.06.2023 Nürnberg. DOI:10.48720/IAB.FOO.20230605.02

Abstract

"Professor Alan Manning, one of the world’s most renowned labour market economists, explains in this video-statement the basic idea of imperfect competition in the labour market. He elaborates on the power of employers to keep wages lower than they would be in a competitive market and stresses the importance to address this imbalance with institutions such as the minimum wage." (Author's abstract, IAB-Doku) ((en))

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Wursten, Jesse & Michael Reich (2023): Racial inequality in frictional labor markets: Evidence from minimum wages. In: Labour Economics, Jg. 82. DOI:10.1016/j.labeco.2023.102344

Abstract

"We provide the first causal analysis of how state and federal minimum wage policies in the U.S. have affected labor market frictions and racial wage gaps. Using stacked event studies, binned difference-in-differences estimators, within-person analyses and classic panel methods, we find that minimum wages increased wages of black workers between 16 and 64% more than among white workers and reduced the overall black-white wage gap by 10% (and by 56% among workers most affected by the policies). Racial differences in initial wages cannot explain this differential effect. Rather, minimum wages expand job opportunities for black workers more than for white workers. We present a model with labor market frictions in which minimum wages expand the job search radius of workers who do not own automobiles and who live farther from jobs. Our causal results using the ACS show that minimum wages increase commuting via automobile among black workers but not among white workers, supporting our model. Minimum wages also reduce racial gaps in separations and hires, further suggesting the policies especially enhance job opportunities for black workers." (Author's abstract, IAB-Doku, © 2023 Elsevier) ((en))

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Žarković, Jelena, Artan Mustafa & Mihail Arandarenko (2023): Minimum income in the Western Balkans: From socialism to the European Pillar of Social Rights. In: Social Policy and Administration, Jg. 57, H. 1, S. 1-15. DOI:10.1111/spol.12855

Abstract

"In this article, we examine the evolution of minimum income programmes in the Western Balkans (comprising Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia). During socialism, Yugoslavia developed a rudimentary minimum income protection programme, while Albania did not have one. As countries moved towards a market economy, socialism's legacy remained relevant, but especially since 2000, governments have taken more direct responsibility for the minimum income schemes—typically under the influence of the World Bank. The attention was paid to strict targeting accuracy rather than to adequacy or sufficient coverage of the lowest deciles. In essence, neither socialist nor neoliberal policymakers ever recognised anything but the poverty relief function of the minimum income. Both ideologies were hostile, or at best indifferent, to increasing the adequacy and generosity of minimum income programmes, perceiving them as impediments and distractions that slowed socialist and neoliberal transformations. Despite some reform initiatives supported by the World Bank and, more recently, the European Union, the generosity and adequacy of minimum income programmes remain low, and coverage keeps declining. There have been very few efforts to develop inclusion function of the minimum income, while the activation aspect has achieved very little, sometimes degrading into punitive programmes of unpaid community work. In this dismal picture, the European Pillar of Social Rights action framework could serve as a guide for a long overdue third phase in the Western Balkans' minimum income policy evolution." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Europäische Kommission. Generaldirektion Beschäftigung, Soziales und Integration (2023): Labor Market and Wage Developments in Europe 2023. (Labour market and wage developments in Europe : annual review), Luxembourg, 138 S.

Abstract

"The Labor Market and Wage Developments in Europe report analyses the labor market from a macroeconomic perspective. This year’s edition discusses the situation and prospects for the EU labor market, which has continued to perform well notwithstanding the economic slowdown and an economic context characterised by persistent uncertainty. The report also reviews recent wage and labor cost developments in the EU and its Member States in the current high-inflation environment. While wage growth has been robust, it has not been sufficient to compensate for the high inflation. At the same time, statutory minimum wage policies have contributed to protecting the purchasing power of minimum-wage earners. Finally, the report examines the developments in working time across the EU, assessing how individual preferences have evolved following the COVID-19 pandemic and discussing the effects of working time policies on workers’ wellbeing and on the broader economic context." (Author's abstract, IAB-Doku) ((en))

Abstract

"This study explores the importance of financial incentives for the labor market integration of minimum income recipients compared to other factors, via three distinct strands of analysis: Benefit adequacy and work incentives: The study examines the potential trade-off in the design of minimum income schemes between ensuring adequate income support and providing sufficient incentive for recipients to look for employment. To do so, it calculates for each EU Member State the “participation tax rate” (PTR), which measures the net income lost by someone moving from receiving minimum income benefits into work relative to the income gained. It then assesses the actual importance of high PTRs on work incentives by analysing the empirical evidence available. Gradual phasing out of benefits: The study examines how minimum income schemes make use of tapering to ensure a financial incentive for recipients to take up (more) work. To do so, it takes inventory of the tapering arrangements currently applicable in Member States and examines how these are implemented. It also identifies recent reforms to tapering mechanisms, case studies on six recent reforms, and uses these to reflect on their impact. Active labor market policies for minimum income recipients: The study examines the use of active labour market policies and what types of policy may be most effective in enabling transition for minimum income benefit recipients. To do so, it performs a quantitative analysis of the data from the EU Labor Market Policy database and a qualitative analysis of evaluations of programs co-funded by the European Social Fund. In both cases long-term unemployed were used as a proxy for minimum income benefit recipients." (Author's abstract, IAB-Doku) ((en))

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Adam, Georg (2022): Die Entwicklung der gesetzlichen Mindestlohnsetzung in der EU und ihre Bedeutung für die Gewerkschaften. In: Wirtschaft und Gesellschaft, Jg. 48, H. 3, S. 365-406.

Abstract

"In der Europäischen Union bestehen auf nationaler Ebene sehr unterschiedliche Mindestlohnregime. Dieser Beitrag fokussiert auf den internationalen Vergleich von Mindestlohnregimen, wobei besonderes Augenmerk auf die Modi der gesetzlichen Festlegung von Mindestlöhnen gelegt wird. Darüber hinaus analysiert der Beitrag – ausgehend vom Konzept der Governance – den wechselseitigen Zusammenhang zwischen der gesetzlichen Mindestlohnsetzung und der Kollektivvertragspolitik. Drittens beleuchtet der Beitrag auf Grundlage des sogenannten Machtressourcenansatzes den Zusammenhang zwischen der Mindestlohnpolitik und den unterschiedlichen Dimensionen gewerkschaftlicher Macht. Insbesondere wird untersucht, unter welchen Bedingungen der gesetzliche Mindestlohn als institutionelle Machtressource der Gewerkschaften fungieren kann." (Autorenreferat, IAB-Doku)

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Adamopoulou, Effrosyni, Francesco Manaresi, Omar Rachedi & Emircan Yurdagul (2022): Minimum Wages and Insurance Within the Firm. (CRC TR 224 discussion paper series / EPoS Collaborative Research Center Transregio 224 326), Bonn, 46 S.

Abstract

"Minimum wages alter the allocation of firm-idiosyncratic risk across workers. To establish this result, we focus on Italy, and leverage employer-employee data matched to firm balance sheets and hand-collected wage floors. We find a relatively larger pass-through of firm-specific labor-demand shocks into wages for the workers whose earnings are far from the floors, but who are employed by establishments intensive in minimum-wage workers. We study the welfare implications of this fact using an incomplete-market model. The asymmetric pass-through uncovers a novel channel which tilts the benefits of removing minimum wages toward high-paid employees at the expense of low-wage workers." (Author's abstract, IAB-Doku) ((en))

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Adams, Camilla, Jonathan Meer & CarlyWill Sloan (2022): The minimum wage and search effort. In: Economics Letters, Jg. 212. DOI:10.1016/j.econlet.2022.110288

Abstract

"Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Using event study analysis of recent minimum wage increases, we find that these changes do not affect the likelihood of searching, but do lead to transitory spikes in search effort by individuals already looking for work. These results are not driven by changes in the composition of searchers, and are concentrated among the groups most likely to be impacted by the minimum wage and in response to larger minimum wage increases." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Afonso, António, João Tovar Jalles & Zoe Venter (2022): Minimum Wage and Collective Bargaining Reforms: A Narrative Database for Advance Economies. (CESifo working paper 9692), München, 21 S.

Abstract

"This paper presents and describes a new database of major minimum wage and collective bargaining reforms covering 26 advanced economies over the period 1970-2020. The main advantage of this dataset is the precise identification of the nature and date of major reforms, which is valuable in many empirical applications. Based on the dataset, major changes in minimum wages have been more frequent than in collective bargaining in the last decades, and the majority of these were implemented during the 1980s and 1990s. In our empirical application, we find that minimum wage reforms have a medium-run positive impact on labor productivity and they lead to a fall in the unemployment rate. Collective bargaining reforms do not seem to affect either productivity or capital formation but they have a clear medium-term effect on the labor market. Moreover, collective bargaining reforms are more sensitivity to the prevailing business cycle conditions at the time of the reform (vis-à-vis minimum wage reforms)." (Author's abstract, IAB-Doku) ((en))

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Agarwal, Sumit, Brent W. Ambrose & Moussa Diop (2022): Minimum wage increases and eviction risk. In: Journal of Urban Economics, Jg. 129. DOI:10.1016/j.jue.2021.103421

Abstract

"We extend the debate on the benefits to increasing the minimum wage by examining the impact on expenses associated with shelter, a previously unexplored area. Our analysis uses a unique data set that tracks household rental payments. Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.7 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 10.6% fewer monthly defaults. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Albinowski, Maciej & Piotr Lewandowski (2022): The heterogeneous regional effects of minimum wages in Poland. In: Economics of Transition and Institutional Change, Jg. 30, H. 2, S. 237-267. DOI:10.1111/ecot.12283

Abstract

"We evaluate the impact of large minimum wage hikes on employment and wage growth in Poland between 2004 and 2018. We estimate panel data models utilizing the considerable variation in wage levels, and in minimum wage bites, across 73 Polish NUTS 3 regions. We find that minimum wage hikes had a significant positive effect on wage growth and a significant negative effect on employment growth only in regions of Poland that were in the first tercile of the regional wage distribution in 2007. These effects were moderate in size, and appear to be more relevant for wages. Specifically, if the ratio of minimum wage to average wage had remained constant after 2007, by 2018, the average wages in these regions would have been 3.2% lower, while employment would have been 1.2% higher. In the remaining two-thirds of Polish regions, we find no significant effects of minimum wage hikes on average wages or on employment." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Berger, David W., Kyle F. Herkenhoff & Simon Mongey (2022): Minimum Wages, Efficiency and Welfare. (NBER working paper 29662), Cambridge, Mass, 84 S. DOI:10.3386/w29662

Abstract

"It has long been argued that a minimum wage could alleviate efficiency losses from monopsony power. In a general equilibrium framework that quantitatively replicates results from recent empirical studies, we find higher minimum wages can improve welfare, but most welfare gains stem from redistribution rather than efficiency. Our model features oligopsonistic labor markets with heterogeneous workers and firms and yields analytical expressions that characterize the mechanisms by which minimum wages can improve efficiency, and how these deteriorate at higher minimum wages. We provide a method to separate welfare gains into two channels: efficiency and redistribution. Under both channels and Utilitarian social welfare weights the optimal minimum wage is $15, but alternative weights can rationalize anything from $0 to $31. Under only the efficiency channel, the optimal minimum wage is narrowly around $8, robust to social welfare weights, and generates small welfare gains that recover only 2 percent of the efficiency losses from monopsony power." (Author's abstract, IAB-Doku) ((en))

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Boffy-Ramirez, Ernest (2022): Push or Pull? Measuring the labor supply response to the minimum wage using an individual-level panel. In: Applied Economics, Jg. 54, H. 35, S. 4043-4059. DOI:10.1080/00036846.2021.2020713

Abstract

"For individuals in low-wage labour markets, an increase in the minimum wage can theoretically pull them into or push them out of the labour force. If increases raise expected wages beyond reservation wages, marginal individuals could enter the labour force and begin searching for employment. If increases lower expected wages, marginal individuals already in the labour force could exit. Leveraging revised individual identifiers in the U.S. Current Population Survey, this research estimates the contemporaneous effects of minimum wage increases on labour force participation. The use of within-person variation, short individual panels, and flexible controls for time create an empirical strategy that mitigates potential biases from unobserved constant individual-level heterogeneity and time-varying factors. This research finds that minimum wage changes tend to impact the youngest individuals, but there is substantial heterogeneity in responses by age, race/ethnicity, and sex. There is stronger evidence of pull effects amongst young white men and Latinos, and weaker evidence amongst young Black women and older Latinas. Weak evidence of push effects is observed amongst younger white women, younger Latinos, and older Latinas. This research highlights heterogeneous labour force participation responses to further inform our understanding of search behaviour and labour market churn." (Author's abstract, IAB-Doku) ((en))

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Cengiz, Doruk, Arindrajit Dube, Attila S. Lindner & David Zentler-Munro (2022): Seeing Beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes. In: Journal of labor economics, Jg. 40, H. S1, S. S203-S247. DOI:10.1086/718497

Abstract

"We assess the effect of the minimum wage on labor market outcomes. First, we apply modern machine learning tools to predict who is affected by the policy. Second, we implement an event study using 172 prominent minimum wage increases between 1979 and 2019. We find a clear increase in wages of affected workers and no change in employment. Furthermore, minimum wage increases have no effect on the unemployment rate, labor force participation, or labor market transitions. Overall, these findings provide little evidence of changing search effort in response to a minimum wage increase." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2022): How Important are Minimum Wage Increases in Increasing the Wages of Minimum Wage Workers? (NBER working paper 29824), Cambridge, Mass, 39 S. DOI:10.3386/w29824

Abstract

"Popular discussion commonly presumes an outsized role for minimum wage increases as a driver of wage increases for minimum wage workers. In this paper, we investigate the accuracy of this presumption using data from the earnings studies of the Current Population Survey (CPS). CPS wage and earnings data enable us to assess the fraction of minimum wage workers who receive a raise within 12 months of their initial appearance as a minimum wage worker. On average from 2010 to 2019, we find that roughly 75 percent of minimum wage workers who remain employed experience a wage increase within 12 months. This fraction is higher during the later years of the sample, when the labor market has been strong, than in the earlier years. The fraction of minimum wage workers receiving wage increases is moderately higher when states enact minimum wage increases than when they do not. We also find that the fraction of minimum wage workers receiving wage increases is correlated with several measures of labor market tightness. Finally, wage gains are quite commonly associated with industry and/or occupation switches. This highlights the importance of career progression for the growth of earnings among entry-level workers. The vast majority of the wage gains realized by minimum wage workers thus appear to be driven by career progression and increases in labor demand. Minimum wage increases play a modest role as a driver of earnings trajectories beyond shaping the initial, typically short-lived, minimum wage job itself." (Author's abstract, IAB-Doku) ((en))