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Brandon, Alec, Justin E. Holz, Andrew Simon & Haruka Uchida (2023): Minimum Wages and Racial Discrimination in Hiring: Evidence from a Field Experiment. (Upjohn Institute working paper 389), Kalamazoo, Mich., 90 S. DOI:10.17848/wp23-389

Abstract

"When minimum wages increase, employers may respond to the regulatory burdens by substituting away from disadvantaged workers. We test this hypothesis using a correspondence study with 35,000 applications around ex-ante uncertain minimum wage increases in three U.S. states. Before the increases, applicants with distinctively Black names were 19 percent less likely to receive a callback than equivalent applicants with distinctively white names. Announcements of minimum wage hikes substantially reduce callbacks for all applicants but shrink the racial callback gap by 80 percent. Racial inequality decreases because firms disproportionately reduce callbacks to lower-quality white applicants who benefited from discrimination under lower minimum wages." (Author's abstract, IAB-Doku) ((en))

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Brochu, Pierre, David A. Green, Thomas Lemieux & James Townsend (2023): The Minimum Wage, Turnover, and the Shape of the Wage Distribution. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16514), Bonn, 62 S.

Abstract

"This paper proposes an empirical approach to decompose the distributional effects of minimum wages into effects for workers moving out of employment, workers moving into employment, and workers continuing in employment. We estimate the effects of the minimum wage on the hazard rate for wages, which provides a convenient way of re-scaling the wage distribution to control for possible employment effects. We find that minimum wage increases do not result in an abnormal concentration of Job Leavers below the new minimum wage, which is inconsistent with employment effects predicted by a neoclassical model. We also find that, for Job Stayers, the spike and spillover effects of the minimum wage are simply shifted right to the new minimum wage. Our findings are consistent with a model where entry wages are set according to a job ladder, and where firms preserve their internal wage structure due to fairness or internal incentives issues." (Author's abstract, IAB-Doku) ((en))

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Brochu, Pierre, David A. Green, James Townsend & Thomas Lemieux (2023): The minimum wages, turnover, and the shape of the wage distribution. (IFS working paper / Institute for Fiscal Studies 2023,32), London, 62 S.

Abstract

"This paper proposes an empirical approach to decompose the distributional effects of minimum wages into effects for workers moving out of employment, workers moving into employment, and workers continuing in employment. We estimate the effects of the minimum wage on the hazard rate for wages, which provides a convenient way of re-scaling the wage distribution to control for possible employment effects. We find that minimum wage increases do not result in an abnormal concentration of Job Leavers below the new minimum wage, which is inconsistent with employment effects predicted by a neoclassical model. We also find that, for Job Stayers, the spike and spillover effects of the minimum wage are simply shifted right to the new minimum wage. Our findings are consistent with a model where entry wages are set according to a job ladder, and where firms preserve their internal wage structure due to fairness or internal incentives issues." (Author's abstract, IAB-Doku) ((en))

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Brunner, Laura, Nina Gloger & Christian Hohendanner (2023): Sonderauswertung zur Situation der vom Mindestlohn betroffenen Betriebe im Jahr 2022 auf Basis des IAB-Betriebspanels. Abschlussbericht. Studie im Auftrag der Mindestlohnkommission. Nürnberg, 26 S.

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Burkhauser, Richard V., Drew McNichols & Joseph J. Sabia (2023): Minimum Wages and Poverty: New Evidence from Dynamic Difference-in-Differences Estimates. (NBER working paper / National Bureau of Economic Research 31182), Cambridge, Mass, 97 S.

Abstract

"Advocates of minimum wage increases have long touted their potential to reduce poverty. This study assesses this claim. Using data spanning nearly four decades from the March Current Population Survey, and a dynamic difference-in-differences approach, we find that a 10 percent increase in the minimum wage is associated with a (statistically insignificant) 0.17 percent increase in the probability of longer-run poverty among all persons. With 95% confidence, we can rule out long-run poverty elasticities with respect to the minimum wage of less than -0.129, which includes central poverty elasticities reported by Dube (2019). Prior evidence suggesting large poverty-reducing effects of the minimum wage are (i) highly sensitive to researcher’s choice of macroeconomic controls, and (ii) driven by specifications that limit counterfactuals to geographically proximate states (“close controls”), which poorly match treatment states’ pre-treatment poverty trends. Moreover, an examination of the post-Great Recession era — which saw frequent, large increases in state minimum wages — failed to uncover poverty-reducing effects of the minimum wage across a wide set of specifications. Finally, we find that less than 10 percent of workers who would be affected by a newly proposed $15 federal minimum wage live in poor families." (Author's abstract, IAB-Doku) ((en))

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Börschlein, Erik-Benjamin, Mario Bossler, Bernd Fitzenberger & Martin Popp (2023): Mit der Erhöhung auf 12 Euro liegt die Entwicklung des gesetzlichen Mindestlohns über der Tariflohn- und Preisentwicklung. In: IAB-Forum H. 11.12.2023 Nürnberg. DOI:10.48720/IAB.FOO.20231211.01

Abstract

"Zum 1. Oktober 2022 wurde der gesetzliche Mindestlohn außerplanmäßig von 10,45 Euro auf 12 Euro pro Stunde erhöht. Er liegt seither deutlich über der Entwicklung der Tariflöhne. Obwohl die hohe Inflation der vergangenen beiden Jahre die Kaufkraft des Mindestlohns geschmälert hat, liegt er preisbereinigt noch immer 11,6 Prozent über dem Niveau von 2015. Die durchschnittlichen Tariflöhne hingegen haben seitdem um 3,8 Prozent an realem Wert verloren." (Autorenreferat, IAB-Doku)

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Caliendo, Marco, Nico Pestel & Rebecca Olthaus (2023): Long-Term Employment Effects of the Minimum Wage in Germany: New Data and Estimators. (arXiv papers), 35 S.

Abstract

"We study the long-term effects of the 2015 German minimum wage introduction and its subsequent increases on regional employment. Using data from two waves of the Structure of Earnings Survey allows us to estimate models that account for changes in the minimum wage bite over time. While the introduction mainly affected the labor market in East Germany, the raises are also increasingly affecting low-wage regions in West Germany, such that around one third of regions have changed their (binary) treatment status over time. We apply different specifications and extensions of the classic difference-in-differences approach as well as a set of new estimators that enables for unbiased effect estimation with a staggered treatment adoption and heterogeneous treatment effects. Our results indicate a small negative effect on dependent employment of 0.5 percent, no significant effect on employment subject to social security contributions, and a significant negative effect of about 2.4 percent on marginal employment until the first quarter of 2022. The extended specifications suggest additional effects of the minimum wage increases, as well as stronger negative effects on total dependent and marginal employment for those regions that were strongly affected by the minimum wage in 2015 and 2019." (Author's abstract, IAB-Doku) ((en))

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Caliendo, Marco, Alexandra Fedorets, Malte Preuß, Carsten Schröder & Linda Wittbrodt (2023): The short- and medium-term distributional effects of the German minimum wage reform. In: Empirical economics, Jg. 64, H. 3, S. 1149-1175. DOI:10.1007/s00181-022-02288-4

Abstract

"This study quantifies the distributional effects of the minimum wage introduced in Germany in 2015. Using detailed Socio-Economic Panel survey data, we assess changes in the hourly wages, working hours, and monthly wages of employees who were entitled to be paid the minimum wage. We employ a difference-in-differences analysis, exploiting regional variation in the “bite” of the minimum wage. At the bottom of the hourly wage distribution, we document wage growth of 9% in the short term and 21% in the medium term. At the same time, we find a reduction in working hours, such that the increase in hourly wages does not lead to a subortionate increase in monthly wages. We conclude that working hours adjustments play an important role in the distributional effects of minimum wages." (Author's abstract, IAB-Doku, © Springer-Verlag) ((en))

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Clemens, Jeffrey & Michael R. Strain (2023): Does Wage Theft Vary by Demographic Group? Evidence from Minimum Wage Increases. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16550), Bonn, 30 S.

Abstract

"Using Current Population Survey data, we assess whether and to what extent the burden of "wage theft" - wage payments below the statutory minimum wage - falls disproportionately on various demographic groups following minimum wage increases. For most racial and ethnic groups at most ages we find that underpayment rises similarly as a fraction of realized wage gains in the wake of minimum wage increases. We also present evidence that the burden of underpayment falls disproportionately on relatively young African American workers and that underpayment increases more for Hispanic workers among the full working-age population." (Author's abstract, IAB-Doku) ((en))

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Cova, Joshua (2023): Politicizing the minimum wage: A multilingual text analysis of minimum wages in European electoral manifestos. In: Journal of European Social Policy, Jg. 33, H. 4, S. 469-483. DOI:10.1177/09589287231199561

Abstract

"This article examines the determinants of the growing political salience of minimum wages in European party manifestos. By using multilingual quantitative text analysis, I show that the electoral salience of minimum wages has increased in the past decades. Although left-wing parties emphasize minimum wages more than right-wing parties, I find that the electoral salience of this policy follows a U-shaped relationship: right-wing populist parties dedicate greater attention to minimum wages than centre-right parties do. A sentiment analysis finds that compared to other policies designed to supplement the income of low-wage workers, such as strengthening collective bargaining institutions and in-work benefits/wage subsidies, there do not seem to be specific party-political characteristics, which determine the sentiment with which discussions on minimum wages are framed." (Author's abstract, IAB-Doku) ((en))

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Di Nola, Alessandro, Luke Haywood & Haomin Wang (2023): Gendered effects of minimum wage. (Working Paper Series / Universität Konstanz, Cluster of Excellence 'The Politics of Inequality' 14), Konstanz, 52 S.

Abstract

"Women are more likely to work in jobs with low hours than men. Low-hour jobs are associated with lower hourly wages and are more likely impacted by minimum wages that set a floor on hourly wages. We document that the first German minimum wage significantly increased women's transition towards jobs with higher weekly hours. We construct and estimate an equilibrium search model with demographic and firm productivity heterogeneity. The model replicates observed gender gaps in employment, hours and wage and the positive relationship between hours and hourly wages. We implement the minimum wage in our model with a penalty to address non-compliance. Based on our model, the minimum wage primarily reduces the gender income gap through the gender wage gap. At its 2022 level, the German minimum wage reduces the gender employment and hours gap due to an upward reallocation effect, resulting in women's increased participation in higher-hour jobs with lower separation rates. The upward reallocation effect is the strongest for women with children and varies by marital state and spousal income. While the minimum wage only modestly discourages firms from posting jobs, it shifts job offers toward full-time positions." (Author's abstract, IAB-Doku) ((en))

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Dickens, Richard (2023): How are minimum wages set? (IZA world of labor 211), Bonn, 11 S. DOI:10.15185/izawol.211.v2

Abstract

"The minimum wage has never been as high on the political agenda as it is today, with politicians in Germany, the UK, the US, and other OECD countries implementing substantial increases in the rate. One reason for the rising interest is the growing consensus among economists and policymakers that minimum wages, set at the right level, may help low paid workers without harming employment prospects. But how should countries set their minimum wage rate? The processes that countries use to set their minimum wage rate and structure differ greatly, as do the methods for adjusting it. The different approaches have merits and shortcomings." (Author's abstract, IAB-Doku) ((en))

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Drechsel-Grau, Moritz (2023): Employment and Reallocation Effects of Higher Minimum Wages. (CESifo working paper 10412), München, 64 S.

Abstract

"This paper studies the employment and reallocation effects of minimum wages in Germany in a search-and-matching model with endogenous job search effort and vacancy posting, multiple employment levels, a progressive tax-transfer system, and worker and firm heterogeneity. I find that minimum wages up to 70% of the median wage significantly increase productivity, hours worked and output without reducing employment. In frictional labor markets, however, reallocation takes time whenever the minimum wage cuts deep into the wage distribution. I show that gradually implementing a high minimum wage is necessary to avoid elevated unemployment rates during the transition." (Author's abstract, IAB-Doku) ((en))

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Dumpert, Florian & Martin Beck (2023): Verbesserung der Datengrundlage der Mindestlohnforschung mittels maschineller Lernverfahren. In: Wirtschafts- und Sozialstatistisches Archiv, Jg. 17, H. 1, S. 5-34. DOI:10.1007/s11943-023-00318-w

Abstract

"Mit der Einführung des allgemeinen gesetzlichen Mindestlohnes zum 1. Januar 2015 stieg der Bedarf an geeigneten Daten für die Evaluation der Mindestlohnwirkungen. Die Mindestlohnkommission empfahl daher in ihrem ersten Bericht an die Bundesregierung die Verknüpfung der Integrierten Erwerbsbiografien mit der Verdienststrukturerhebung. Die Paneldaten der Integrierten Erwerbsbiografien sollen durch die Verknüpfung mit ansonsten fehlenden Angaben zum Bruttostundenverdienst bzw. zur Mindestlohnbetroffenheit aus der Verdienststrukturerhebung angereichert werden, um so die Analysemöglichkeiten zu verbessern. Sowohl ein deterministisches als auch ein probabilistisches Record Linkage waren aus rechtlichen Gründen nicht umsetzbar. Daher hat das Statistische Bundesamt die Option einer Anreicherung der Integrierten Erwerbsbiografien mit Informationen zur Mindestlohnbetroffenheit aus der Verdienststrukturerhebung auch mittels maschineller Lernverfahren geprüft. Im Fokus standen die Methoden „Random Forest“ und „Boosting“, die keine Verknüpfung oder Weitergabe von Einzeldatensätzen erfordern und daher datenschutzrechtlich handhabbar sind. Über die konkrete Vorgehensweise, speziell die getesteten Modellierungsvarianten für die Teilpopulationen Vollzeit‑, Teilzeit- und geringfügig entlohnte Beschäftigte, wird in diesem Beitrag ausführlich berichtet." (Autorenreferat, IAB-Doku, © Springer-Verlag)

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Dütsch, Matthias, Orkun Altun, Luisa Grundmann & Ralf Himmelreicher (2023): What does the German minimum wage do? The impact of the introduction of the statutory minimum wage on the composition of low- and minimum-wage labour. (baua: Preprint / Bundesanstalt für Arbeitsschutz und Arbeitsmedizin), Dortmund, 30 S. DOI:10.21934/baua:preprint20230201

Abstract

"In this article, we examine structural changes in minimum-wage and low-wage labour after the introduction and first increase of the German minimum wage. Changes in the risks workers face of earning gross hourly wages below the minimum-wage or low-wage thresholds are identified by comparing individual, company-level and sectoral characteristics based on the Structure of Earnings Surveys (SESs) 2014 and 2018. The SES is a mandatory survey of companies that provides information on wages and working hours for approximately 1 million jobs and nearly 70,000 companies from all industries. Using these rich data, we present the first systematic analysis of how structural changes in individual-, company-, and industry-level determinants affect minimum- and low-wage workers. Using a descriptive analysis, we first summarize the changing pattern in jobs, companies, and industries after the minimum wage introduction. Second, we use random intercept-only models to estimate the explanatory power of the individual, company, and industry levels in the years 2014 and 2018 respectively. Third, we perform logistic and linear regression estimations to assess the changing risks of having a minimum- or low-wage job and the distance between a worker’s actual earnings and the minimum and low-wage thresholds. We conclude that the minimum wage had an elevator effect regarding minimum-wage labour. However, compositional effects regarding the minimum-wage and low-wage workforce were evident in terms of individual and company factors. There was a selective redistribution of minimum-wage employees into slightly higher wage ranges. Furthermore, convergence seems to have occurred predominantly among sectors, as their explanatory power for lower wages declined." (Author's abstract, IAB-Doku) ((en))

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Dütsch, Matthias, Orkun Altun, Luisa Grundmann & Ralf Himmelreicher (2023): What Does the German Minimum Wage Do? The Impact of the Introduction of the Statutory Minimum Wage on the Composition of Low- and Minimum-Wage Labour. In: Jahrbücher für Nationalökonomie und Statistik, Jg. 243, H. 3-4, S. 355-396. DOI:10.1515/jbnst-2022-0070

Abstract

"In this article, we examine structural changes in minimum wage and low wage labor following the introduction and first increase of the German minimum wage. Changes in the impact that workers face earning gross hourly wages below the minimum-wage or low-wage thresholds are identified by comparing individual, company and sectoral characteristics based on the Structure of Earnings Surveys (SESs) 2014 and 2018. The SES is a mandatory survey of companies that provides information on wages and working hours for approximately 1 million jobs and nearly 70,000 companies across all industries. Using these rich data, we present the first systematic analysis of how structural changes in individual-, company-, and industry-level determinants affect minimum- and low-wage workers. Using descriptive analysis, we first summarize the changing pattern in jobs, companies, and industries after the introduction of minimum wage. Second, we use random intercept-only models to estimate the explanatory power at the individual, company, and industry levels in 2014 and 2018. Third, we perform logistic and linear regression estimations to assess the changing trends in having a minimum- or low-wage job and the distance between a worker’s actual earnings and the minimum- and low-wage thresholds. We conclude that the minimum wage had an elevator effect on minimum wage labor. However, compositional effects regarding the minimum-wage and low-wage workforce were evident in terms of individual and company factors. There was a selective redistribution of minimum wage employees into slightly higher wage ranges. Furthermore, convergence seems to have occurred predominantly among sectors, as their explanatory power for lower wages declined." (Author's abstract, IAB-Doku, © De Gruyter) ((en))

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Fazio, Andrea & Tommaso Reggiani (2023): Minimum wage and tolerance for high incomes. In: European Economic Review, Jg. 155. DOI:10.1016/j.euroecorev.2023.104445

Abstract

"We suggest that stabilizing the baseline income can make low-wage workers more tolerant towards high income earners. We present evidence of this attitude in the UK by exploiting the introduction of the National Minimum Wage (NMW), which institutionally sets a baseline pay reducing the risk of income losses and providing a clear reference point for British workers at the lower end of the income distribution. Based on data from the British Household Panel Survey (BHPS), we show that workers who benefited from the NMW program became relatively more tolerant of high incomes and more likely to support and vote for the Conservative Party. As far as tolerance for high incomes is related to tolerance of inequality, our results may suggest that people advocate for equality also because they fear income losses below a given reference point." (Author's abstract, IAB-Doku, © 2023 Elsevier) ((en))

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Fazio, Andrea & Tommaso G. Reggiani (2023): Minimum Wage and Tolerance for High Incomes. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16107), Bonn, 27 S.

Abstract

"We suggest that stabilizing the baseline income can make low-wage workers more tolerant towards high income earners. We present evidence of this attitude in the UK by exploiting the introduction of the National Minimum Wage (NMW), which institutionally sets a baseline pay reducing the risk of income losses and providing a clear reference point for British workers at the lower end of the income distribution. Based on data from the British Household Panel Survey (BHPS), we show that workers who benefited from the NMW program became relatively more tolerant of high incomes and more likely to support and vote for the Conservative Party. As far as tolerance for high incomes is related to tolerance of inequality, our results may suggest that people advocate for equality also because they fear income losses below a given reference point." (Author's abstract, IAB-Doku) ((en))

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Filauro, Stefano, Klaus Grünberger & Edlira Narazani (2023): The Impact of Minimum Wages on Income Inequality in the EU. (JRC working papers on taxation and structural reforms 2023,04), Seville, 33 S.

Abstract

"A number of studies documents that minimum wage policies have the potential to reduce income inequality. The recently adopted EU Commission's proposal for a Directive on adequate minimum wages was supported by a detailed analysis of the social impacts of hypothetical minimum wage levels in countries with a statutory minimum wage. This paper extends these country-level analyses by exploring the impact of minimum wage policies on EU-level income inequality. To our knowledge, this is the first study that uses a microsimulation model such as EUROMOD to assess the impact of EU-promoted policies on the distribution of income in the EU, beyond their national effects. Assuming no employment effects, static simulation results show that a hypothetical minimum wage corresponding to 60% of the national median wage would bring about a small but significant reduction in EU-level disposable income inequality (by 0.75% in 2019 as measured through the Gini index). This result stems primarily from a reduction in the within-country component of income inequality as the effect on inequality between countries is rather muted. The reduction in EU-level income inequality is the highest in disposable incomes, but some reduction is detectable also in market incomes. In turn, the withdrawal of social benefits because of higher minimum wages seems to neutralise part of this inequality reduction." (Author's abstract, IAB-Doku) ((en))

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Forsythe, Eliza (2023): The Effect of Minimum Wage Policies on the Wage and Occupational Structure of Establishments. In: Journal of labor economics, Jg. 41, H. S1, S. S291-S324. DOI:10.1086/726820

Abstract

"Using establishment-level panel data from the Occupational Employment and Wage Statistics program, I estimate the effect of minimum wage increases implemented by 10 states in 2014 and 2015. I show that minimum wage increases lead to wage spillovers within establishments. I find little evidence that minimum wage increases induce establishments to reorganize their occupational mix. Finally, I find that minimum wage increases propagate up the management hierarchy, leading to increased wages for supervisors. Nonetheless, I find overall wage inequality decreases within establishments after minimum wage increases." (Author's abstract, IAB-Doku) ((en))