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Navarro, Lucas & Mauricio M. Tejada (2022): Does public sector employment buffer the minimum wage effects? In: Review of Economic Dynamics, Jg. 43, S. 168-196. DOI:10.1016/j.red.2021.02.004

Abstract

"This paper studies the impact of a minimum wage policy in a labor market with a private and a public sector. We develop a two-sector search and matching model with minimum wage and heterogeneous workers in their human capital. We structurally estimate the model using data for Chile, a country with a large fraction of employment in the public sector and a binding minimum wage. Counterfactual analysis shows that institutional features of public sector employment reduce labor market frictions and mitigate the negative effect of the minimum wage on unemployment and welfare." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Neumark, David & Maysen Yen (2022): Effects of Recent Minimum Wage Policies in California and Nationwide. Results from a Pre-specified Analysis Plan. In: Industrial Relations, Jg. 61, H. 2, S. 228-255. DOI:10.1111/irel.12297

Abstract

"We analyze the impacts of recent city minimum wage increases in California and nationwide, following a pre-analysis plan (PAP) registered prior to the release of data covering two years of minimum wage increases. For California cities, we find a hint of negative employment effects. Nationally, we find some evidence of disemployment effects for teens, but not young adults or high school dropouts. City-specific analyses provide limited evidence of adverse effects on the share low-income, but the pooled city analysis does not; the national analysis generally finds no impact on the share low-income, except for reductions in the share near-poor, although that may at least partly reflect prior trends. All told, we view the results as providing neither strong evidence of substantial adverse effects of city minimum wages, nor strong evidence of substantial beneficial effects." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Neumark, David & Peter Shirley (2022): Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States? In: Industrial Relations, Jg. 61, H. 4, S. 384-417. DOI:10.1111/irel.12306

Abstract

"The disagreement among studies on the employment effects of minimum wages in the United States is well known. Less well known, and more puzzling, is the absence of agreement on what the research literature says—that is, how economists summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers. Our key conclusions are as follows: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults and the less educated; (iii) the evidence from studies of directly affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Renkin, Tobias, Claire Montialoux & Michael Siegenthaler (2022): The Pass-Through of Minimum Wages into U.S. Retail Prices: Evidence from Supermarket Scanner Data. In: The Review of Economics and Statistics, Jg. 104, H. 5, S. 890-908. DOI:10.1162/rest_a_00981

Abstract

"This paper estimates the pass-through of minimum wage increases into the prices of U.S. grocery and drug stores. We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking." (Author's abstract, IAB-Doku, © MIT Press Journals) ((en))

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Roupakias, Stelios (2022): Employment and distributional effects of Greece's national minimum wage. (MPRA paper / University Library of Munich 114244), München: University Library of Munich, Germany, 23 S.

Abstract

"This paper provides explores the short-run effects of minimum wage policies on the distribution of earnings and employment. We exploit the variation in the 'bite' of the minimum wage across region-industry cells, employing data from the Greek Labour Force Survey over the period 2016-2020. Using a Difference-in-Differences strategy, we estimate unconditional quantile regressions that yield economically important effects up to the 40th quantile of the earnings distribution. Importantly, we find that this does not come at the expense of disemployment effects, either at the extensive or at the intensive margin. Interestingly, there is some evidence that an increase in the minimum wage intensity is correlated with higher female employment. We attribute this finding to the fact that female labour markets are usually less competitive" (Author's abstract, IAB-Doku) ((en))

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Schmillen, Achim, Michael Stops & Dewen Wang (2022): The Distribution and Determinants of Minimum Wage Rates. In: World Bank (Hrsg.) (2022): Balancing Workers' Protection and Labor Market Flexibility in China, S. 147-172.

Abstract

"While many analysts have studied the effects of minimum wage rates on wages, employment, and other outcome variables, the distribution and determinants of minimum wages have received less attention. To shed some light on these issues, the authors use a highly disaggregated macro panel of county-level minimum wage rates and other highly disaggregated macro variables from 2005 to 2014 to investigate the distribution of minimum wages in China and the processes used to adjust them. We use spatial econometrics techniques to study the roles of both central mechanisms and spatial interaction effects between subnational governments." (Author's abstract, IAB-Doku) ((en))

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Sousounis, Panos & Gauthier Lanot (2022): Minimum Wage Effects on Reservation Wages. In: Journal of labor research, Jg. 43, H. 3, S. 415-439. DOI:10.1007/s12122-022-09337-y

Abstract

"Reservation wages are part of the transmission mechanism between minimum wages and unemployment via the labour force participation decision. The limited available empirical evidence on the relationship between reservation wages and legal minimum wages suggest that individuals use minimum wages as benchmarks against which their reservation wages are set. This has a profound behavioural effect that may encourage individuals to either enter the labour force or price themselves out of potential employment. We employ a fuzzy regression discontinuity design to explore the influence of minimum wages on reservation wages. Our findings suggest that the behavioural response is too small to be extracted from the variability of the reservation wage data. For policy makers this finding is important. While minimum wages raise earnings and living standards, they can push some workers out of the labour force by increasing their reservation wage beyond the minimum. We do not find any evidence of such a response of the reservation wage of jobseekers to the minimum wage in the UK." (Author's abstract, IAB-Doku, © Springer-Verlag) ((en))

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Todd, Petra E. & Weilong Zhang (2022): Distributional Effects of Local Minimum Wages: A Spatial Job Search Approach. (NBER working paper 30668), Cambridge, Mass, 64 S.

Abstract

"This paper develops and estimates a spatial general equilibrium job search model to study the effects of local and universal (federal) minimum wage policies on employment, wages, job postings, vacancies, migration/commuting, and welfare. In the model, workers, who differ in terms of location and education levels, search for jobs locally and in a neighboring area. If they receive remote offers, they decide whether to migrate or commute. Firms post vacancies in multiple locations and make offers subject to minimum wage constraints. The model is estimated using multiple databases, including the American Community Survey (ACS) and Quarterly Workforce Indicators (QWI), and exploiting minimum wage variation across state borders as well as time series variation (2005-2015). Results show that local minimum wage increases lead firms to post fewer wage offers in both local and neighboring areas and lead lower education workers to reduce interstate commuting. An out-of-sample validation finds that model forecasts of commuting responses to city minimum wage hikes are similar to patterns in the data. A welfare analysis shows how minimum wage effects vary by worker type and with the minimum wage level. Low skill workers benefit from local wage increases up to $10.75/hour and high skill workers up to $12.25/hour. The greatest per capital welfare gain (including both workers and firms) is achieved by a universal minimum wage increase of $12.75/hour." (Author's abstract, IAB-Doku) ((en))

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Welz, Christian & Maria Cantero (2022): Regulating minimum wages and other forms of pay for the self-employed. (Eurofound research report / European Foundation for the Improvement of Living and Working Conditions), Dublin, 67 S. DOI:10.2806/426747

Abstract

"This report is carried out in the context of the three-year pilot project (2021–2023), ‘Role of the minimum wage in establishing the Universal Labour Guarantee’, mandated to Eurofound by the European Commission. Its focus is module 3 of the project, investigating minimum wages and other forms of pay for the self-employed. Out of concern for the challenging conditions faced by certain groups of self-employed workers, some Member States have established or are in discussions about proposing some statutory forms of minimum pay for selected categories of the self-employed. The main objective of the report is to understand how minimum wages, wage rates, tariffs, fees and other forms of pay could be fixed for specific jobs or professions in sectors having a high level of ‘vulnerable’ workers, as well as ‘concealed’ self-employed. While the majority of Member States allow trade union representation, the right to collective bargaining for the selfemployed is much more limited. Only a small number of Member States provide examples of collectively agreed minimum wages or other forms of pay for the self-employed." (Author's abstract, IAB-Doku) ((en))

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Winters, John V. (2022): Minimum Wages and Restaurant Employment for Teens and Adults in Metropolitan and Non-metropolitan Areas. (IZA discussion paper 15499), Bonn, 38 S.

Abstract

"This study estimates effects of minimum wages on individual restaurant employment using the 2005-2019 Current Population Survey (CPS) and a two-way fixed effects regression model. I examine effects for teens and adults with less than an associate's degree for the entire U.S. and by metropolitan area status. The results indicate that minimum wages on average decrease restaurant employment for teens and increase restaurant employment for these adults, suggesting that minimum wages induce labor-labor substitution. However, this pattern is driven by metropolitan areas residents. The estimated coefficient for minimum wages on teen restaurant employment in non-metropolitan areas is not statistically significant." (Author's abstract, IAB-Doku) ((en))

Abstract

"The first joint report of the Social Protection Committee and the European Commission on minimum income arrives at a crucial moment for social Europe. Considering the current volatile socio-economic situation combined with various megatrends at play, solid safety nets are indispensable for the cohesion of our societies and for assisting those in need. It is evident that achieving the new European target of a reduction by at least 15 million of the number of people at risk of poverty or social exclusion in the EU by 2030 will require more efforts. The income of quasi-jobless households has been lagging behind the general income improvements, pointing to the key importance of strengthening social protection systems, and in particular also minimum income schemes, to cope with economic shocks and support vulnerable groups. As the report shows, large divergences between and within the Member States remain. Principle 14 of the European Pillar of Social Rights stresses the right to adequate minimum income to ensure a life in dignity at all stages of life, alongside effective access to enabling goods and services and, for those who can work, a (re)integration to the labour market. In 2020, the Council of the European Union reflected upon the importance of strengthening minimum income protection and acknowledged that such protection, accompanied by activation and social inclusion services, plays a vital role in mitigating the risk of poverty and social exclusion. The Council also invited the European Commission and the Social Protection Committee to ‘prepare periodically a joint report to analyse and review progress achieved in the development of minimum income protection in the Member States, building on the benchmarking framework for minimum income protection established at EU level.’ This current report responds directly to this call. It provides an overview of the current state of play of minimum income policies in the EU Member States, reflecting the three policy strands of active inclusion: adequate income support, inclusive labour markets and access to quality services. It reviews levels and trends in outcomes and performances of national systems, based on the selected indicators of the agreed benchmarking framework on minimum income. The analysis highlights that on average in the EU, adequacy of minimum income benefits has remained almost unchanged in the last decade in spite of some convergence reflecting the fact that new schemes have been introduced in some Member States and reforms have been carried out in others. Countries with higher coverage generally also show lower depth of poverty. Still, estimates available show that non-take-up of minimum income is high, at around 30 % to 50 % of the eligible population. In terms of facilitating labour market participation, the participation of minimum income beneficiaries in active labour market policy measures appears to be low and often limited to certain types of activities. Coordination with bodies offering other complementary benefits and services also appears to be a challenge in many instances." (Author's abstract, IAB-Doku) ((en))

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Arranz, José M., Enrique Fernández-Macías & Carlos García-Serrano (2021): Wage differentials and segmentation: The impact of institutions and changing economic conditions. In: European journal of industrial relations, Jg. 27, H. 2, S. 203-227. DOI:10.1177/0959680120959008

Abstract

"This paper uses data from the European Survey on Income and Living Conditions to offer new empirical evidence on how wage differentials are influenced by the changing economic conditions, that is, before and after the 2008?2010 recession, and shaped by the different institutional frameworks of European Union countries. We examine whether wage changes are homogeneous across groups of workers, as they are classified by their contractual relationship and working time, and by the heterogeneity in institutions that regulate and affect the labour market. Results obtained by estimating ordinary least squares and quantile regressions confirm the existence of contract and working time wage gaps and allow to estimate their different magnitudes along the wage distribution, and their rise during the recession. The impact of labour market institutions on shaping them is diverse, with more intervention of the government in the setting of the minimum wage and stricter regulation for atypical contracts reducing the wage gaps and producing larger positive effects for low-wage employees." (Author's abstract, IAB-Doku) ((en))

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Ashenfelter, Orley & Stepán Jurajda (2021): Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald's Restaurants. (CERGE-EI working paper 684), Prag, 30 S.

Abstract

"We use highly consistent national-coverage price and wage data to provide evidence on wage increases, labor-saving technology introduction, and price pass-through by a large low-wage employer facing minimum wage hikes. Based on 2016-2020 hourly wage rates of McDonald's Basic Crew and prices of the Big Mac sandwich collected simultaneously from almost all US McDonald's restaurants, we find that in about 25% of instances of minimum wage increases, restaurants display a tendency to keep constant their wage 'premium' above the increasing minimum wage. Higher minimum wages are not associated with faster adoption of touch-screen ordering, and there is near-full price pass-through of minimum wages, with little heterogeneity related to how binding minimum wage increases are for restaurants. Minimum wage hikes lead to increases in real wages (expressed in Big Macs an hour of Basic Crew work can buy) that are one fifth lower than the corresponding increases in nominal wages." (Author's abstract, IAB-Doku) ((en))

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Baek, Jisun, Changkeun Lee & WooRam Park (2021): The impact of the minimum wage on the characteristics of new establishments: Evidence from South Korea. In: Labour Economics, Jg. 72. DOI:10.1016/j.labeco.2021.102059

Abstract

"This paper examines how the minimum wage affects the characteristics of new establishments. We utilize the introduction of a minimum wage of South Korea in 1988 and exploit a data covering the universe of new plants subject to this law. From difference-in-differences analyses, we first confirm that the introduction of the minimum wage caused new plants to remit higher remuneration to workers. Due to the minimum wage, new plants tended to start with fewer employees and to equip their employees with more capital. Finally, we find that the minimum wage led to higher labor productivity among entering plants." (Author's abstract, IAB-Doku, © 2021 Elsevier) ((en))

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Bailey, Martha J., John DiNardo & Bryan A. Stuart (2021): The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act. In: Journal of labor economics, Jg. 39, H. S2, S. S329-S367. DOI:10.1086/712554

Abstract

"This paper examines the short- and longer-term economic effects of the 1966 Fair Labor Standards Act (FLSA), which increased the national minimum wage to its highest level of the twentieth century and extended coverage to an additional 9.1 million workers. Exploiting differences in the “bite” of the minimum wage owing to regional variation in the standard of living and industry composition, this paper finds that the 1966 FLSA increased wages dramatically but reduced aggregate employment only modestly. However, some evidence shows that disemployment effects were significantly larger among African American men, 40% of whom earned below the new minimum wage." (Author's abstract, IAB-Doku) ((en))

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Baumann, Arne (2021): What accounts for differences in minimum wage growth between EU member states? (baua: Preprint / Bundesanstalt für Arbeitsschutz und Arbeitsmedizin), Dortmund, 23 S. DOI:10.21934/baua:preprint20210506

Abstract

"Der Beitrag vergleicht auf Basis eines innovativen Datensatzes das Mindestlohnwachstum in 18 EU-Mitgliedsstaaten (ohne Deutschland) in den Jahren 2000-2017 und analysiert die Faktoren, die auf das Mindestlohnwachstum Einfluss nehmen. Dabei wird überprüft, ob Unterschiede beim Mindestlohnwachstum mit institutionellen Unterschieden zwischen den Ländern zusammenhängen oder eher von Unterschieden im Pro-Kopf-Einkommen der Länder herrühren. Zu den institutionellen Unterschieden gehören die für die Anpassung des Mindestlohns verantwortlichen Akteure (z. B. Regierung, Sozialpartner, Experten), aber auch länderspezifische Wirtschaftsstrukturen. Die Ergebnisse zeigen, dass sich die Mindestlohnanpassungen in West- und Osteuropa nicht nur im Umfang sondern auch hinsichtlich der institutionellen Einflüsse deutlich unterscheiden. Die Wachstumsraten in Osteuropa sind merklich höher als in Westeuropa. Ursächlich hierfür ist jedoch nicht der osteuropäische Aufholprozess beim Pro-Kopf-Einkommen, sondern sehr viel aktiveres Regierungshandeln im Vergleich zu Westeuropa. In Westeuropa zeigt sich dagegen ein Zusammenhang zwischen dem Mindestlohnwachstum und der Struktur der Wirtschaft. Je mehr das Wirtschaftswachstum von Exporten abhängt, desto schwächer fällt das Wachstum des Mindestlohns aus. Umgekehrt gilt, dass ein größerer Einfluss des Binnenkonsums auf das Wirtschaftswachstum mit einem höheren Wachstum des Mindestlohns einhergeht." (Autorenreferat, IAB-Doku)

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Bechlioulis, Alexandros & Michael Chletsos (2021): The differentiated effects of minimum wage reforms on unemployment Evidence from the Greek labor market. (MPRA paper / University Library of Munich 109327), München, 27 S.

Abstract

"The paper studies the relative effect between two groups, a treatment group of low-wage workers and a control group of high-wage workers, when a minimum wage reform is introduced. The empirical analysis uses a rich dataset from the Greek labor market over the period between 2010 and 2020. The study examines whether the employees' responses and the potential effects of two different minimum wage reforms on unemployment were heterogenous. Our results are straightforward: among the two groups, the relative possibility of job loss is associated with an increase in the minimum wage, while the relative possibility of job search difficulty is strongly affected by a minimum wage cut. The former result is getting worse for employees who engaged in a minimum wage-intensive sector in the previous year and are now inactive. The latter result is reinforced for very young workers." (Author's abstract, IAB-Doku) ((en))

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Bezooijen, Emiel van, Wiljan van den Berge & Anna Salomons (2021): The Young Bunch: Youth Minimum Wages and Labor Market Outcomes. (CPB discussion paper / CPB Netherlands Bureau for Economic Policy Analysis 422), Den Haag, 53 S. DOI:10.34932/r1bs-x580

Abstract

"The 2017 increase in the Dutch youth minimum wage has improved labor market outcomes for low-paid young workers. In particular, these workers' average wage has risen with 4% without adverse effects on employment or hours worked. These are the key findings of new research on the impact of the minimum wage on labor market outcomes. Minimum wage increases were proposed by several political parties during the Dutch parliamentary elections of 2021, with the aim of increasing job quality in low-paid work. Minimum wages are also a topic of discussion internationally: the United States is witnessing an active campaign for raising minimum wages, and in other countries, such as Germany, minimum wages have recently been introduced or increased. Although many young workers are employed in low-paid jobs, only a relatively small group earns exactly the minimum wage: around 10% in the Netherlands. However, the Dutch minimum wage increase has also boosted incomes of low-paid young workers earning more than the minimum: these so-called spillovers account for 75% of the total wage increase. Further, labor market outcomes have improved most strongly for low-paid young full-time workers who are not enrolled in education: this is important as these workers are less likely to be transient occupants of low-paid jobs." (Author's abstract, IAB-Doku) ((en))

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Burkhauser, Richard V. & Kevin Corinth (2021): The minimum wage versus the earned income tax credit for reducing povert. Enhancing the earned income tax credit would do more to reduce poverty, at less cost, than increasing the minimum wage. (IZA world of Labor 153,2), Bonn, 10 S. DOI:10.15185/izawol.153.v2

Abstract

"Minimum wage increases are not an effective mechanism for reducing poverty. And there is little causal evidence that they do so. Most workers who gain from minimum wage increases do not live in poor (or near-poor) families, while some who do live in poor families lose their job as a result of such increases. The earned income tax credit is an effective way to reduce poverty. It raises only the after-tax wage rates of workers in low- and moderate-income families, the tax credit increases with the number of dependent children, and evidence shows that it increases labor force participation and employment in these families." (Author's abstract, IAB-Doku) ((en))

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Bíró, Anikó, Daniel Prinz & László Sándor (2021): The minimum wage, informal pay and tax enforcement. (IFS working paper / Institute for Fiscal Studies 2021,41), London, 77 S.

Abstract

"We study the taxation of the minimum wage in an environment with imperfect enforcement and informality. We leverage an increase in the audit threat for earnings below a reporting threshold at twice the minimum wage in Hungary and estimate reporting and employment responses with administrative panel data. Using bunching estimators and difference-in-differences methods, we show that a substantial share of those who report earning the minimum wage earn at least the same amount off the books. When enforcement is imperfect, a taxed minimum wage serves as a backstop on underreporting and recovers some revenue but also increases informality." (Author's abstract, IAB-Doku) ((en))