Wage Bargaining and Minimum Wages in a Search–Matching Model

2021 ◽  
Author(s):  
Marcus Dittrich
Keyword(s):  
Minimum Wage ◽  
Spillover Effects ◽  
Theoretical Explanation ◽  
Wage Bargaining ◽  
Minimum Wages ◽  
Wage Distribution ◽  
Nash Solution ◽  
Bargaining Solution ◽  
Matching Model ◽  
The Nash Solution

In this paper, we analyze the introduction of a nonbinding minimum wage in a search–matching model with wage bargaining. Applying the Kalai–Smorodinsky bargaining solution instead of the commonly applied Nash solution, we provide a theoretical explanation for spillover effects of minimum wages on other wages higher up in the wage distribution. The labor market equilibrium in the Kalai–Smorodinsky solution with a minimum wage is characterized by lower market tightness, a higher unemployment rate, and lower vacancy rate than the equilibrium in the Nash solution. Moreover, we show that a nonbinding minimum wage can increase social welfare.

scholarly journals The impact of a minimum wage change on the distribution of wages and household income

2020 ◽  
Author(s):  
Paul Redmond ◽  
Karina Doorley ◽  
Seamus McGuinness
Keyword(s):  
Income Distribution ◽  
Minimum Wage ◽  
Wage Inequality ◽  
Household Income ◽  
Spillover Effects ◽  
Wage Distribution ◽  
Wage Increase ◽  
Minimum Wage Increase ◽  
Wage Change ◽  
The Impact

Abstract We use distribution regression analysis to study the impact of a 6% increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by approximately 8 and 4%, respectively. The results point towards wage spillover effects up to the 30th percentile of the wage distribution. We show that minimum wage workers are spread throughout the household income distribution and are often located in high-income households. Therefore, while we observe strong effects on the wage distribution, the impact of a minimum wage increase on the household income distribution is quite limited.

scholarly journals The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector

2013 ◽  
Vol 14 (3) ◽  
pp. 282-315 ◽  
Author(s):  
Bodo Aretz ◽  
Terry Gregory ◽  
Melanie Arntz
Keyword(s):  
Minimum Wage ◽  
Scale Effects ◽  
Minimum Wages ◽  
Wage Distribution ◽  
Employment Effects ◽  
Eastern Germany

Abstract This study contributes to the sparse literature on employment spillovers of minimum wages. We exploit the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution.

scholarly journals The Effect of Minimum Wages on Low-Wage Jobs*

2019 ◽  
Vol 134 (3) ◽  
pp. 1405-1454 ◽  
Author(s):  
Doruk Cengiz ◽  
Arindrajit Dube ◽  
Attila Lindner ◽  
Ben Zipperer
Keyword(s):  
Minimum Wage ◽  
State Level ◽  
The United States ◽  
Minimum Wages ◽  
Wage Distribution ◽  
Employment Effect ◽  
Hourly Wage ◽  
Difference In Differences ◽  
Bottom Part ◽  
Demographic Groups

Abstract We estimate the effect of minimum wages on low-wage jobs using 138 prominent state-level minimum wage changes between 1979 and 2016 in the United States using a difference-in-differences approach. We first estimate the effect of the minimum wage increase on employment changes by wage bins throughout the hourly wage distribution. We then focus on the bottom part of the wage distribution and compare the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it to infer the employment effect. We find that the overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages. However, we do find some evidence of reduced employment in tradeable sectors. We also show how decomposing the overall employment effect by wage bins allows a transparent way of assessing the plausibility of estimates.

scholarly journals The minimum wage as a wage equality policy: Evidence from North Macedonia

2019 ◽  
Vol 64 (223) ◽  
pp. 61-81
Author(s):  
Marjan Petreski ◽  
Nikica Mojsoska-Blazevski ◽  
Mariko Ouchi
Keyword(s):  
Minimum Wage ◽  
Labour Force ◽  
Spillover Effects ◽  
Wage Distribution ◽  
Wage Increase ◽  
Current Policy ◽  
Wage Level ◽  
Minimum Wage Increase ◽  
Wage Increases ◽  
Wage Compression

The paper aims to investigate if the minimum wage increase of September 2017 resulted in better wage equality in North Macedonia. The increase of 19% was sizable and included levelling up in the three sectors with a lower minimum wage: textiles, apparel, and leather. We extend the ?cell? approach of Card (1992a) and rely on data from the Labour Force Survey 2017 and 2018. The results suggest that the 2017 increase in the minimum wage had a positive, significant, and robust effect on wages. However, the wage increases were almost entirely positioned on the left side of the wage distribution and implied wage compression up to or around the minimum wage. The bunching around the new minimum wage level ?equalised? workers: those who previously earned the new minimum wage level equalised with the less productive workers who approximated their wage only by the power of the law. Hence, wage equality improved. The results confirm that the minimum wage can be an important wage equality policy, with considerably limited upward spillover effects in the current policy and institutional setup.

scholarly journals The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment

2016 ◽  
Vol 8 (1) ◽  
pp. 58-99 ◽  
Author(s):  
David H. Autor ◽  
Alan Manning ◽  
Christopher L. Smith
Keyword(s):  
Minimum Wage ◽  
Wage Inequality ◽  
Wage Structure ◽  
Earnings Inequality ◽  
Minimum Wages ◽  
Wage Distribution ◽  
Prior Work ◽  
Lower Tail ◽  
Structure Changes ◽  
Wage Effects

We reassess the effect of minimum wages on US earnings inequality using additional decades of data and an IV strategy that addresses potential biases in prior work. We find that the minimum wage reduces inequality in the lower tail of the wage distribution, though by substantially less than previous estimates, suggesting that rising lower tail inequality after 1980 primarily reflects underlying wage structure changes rather than an unmasking of latent inequality. These wage effects extend to percentiles where the minimum is nominally nonbinding, implying spillovers. We are unable to reject that these spillovers are due to reporting artifacts, however. (JEL J22, J31, J38, K31)

scholarly journals The Effect of Provincial Minimum Wage on Wage Inequality in Java

2019 ◽  
pp. 352-357
Author(s):  
Daniel Bastian Lubis ◽  
Syamsul Hidayat Pasaribu ◽  
Muhammad Findi
Keyword(s):  
Income Inequality ◽  
Labor Force ◽  
Minimum Wage ◽  
Wage Inequality ◽  
Wage Gap ◽  
Negative Impact ◽  
Minimum Wages ◽  
Wage Distribution ◽  
Wage Setting ◽  
The Impact

The minimum wage setting policy as an effort to improve wage distribution and expected to reduce income inequality is still being a debate in the literatures. However, similar studies, especially those that examine the impact of establishing minimum wages on the conditions of wages for workers in different percentile groups, have not been widely practiced in Indonesia. This study aims to analyze the increase in effective minimum wages against the wage gap of workers in the period 2008-2017 in Java using the National Labor Force Survey (Sakernas) data. Through the OLS method, we find that the impact of minimum wages is not the same among percentile groups. The effective minimum wage has a negative impact on the wage 30th percentile group where an increase in effective wage will reduces the gap between the 30th percentile and the 50th percentile. We find different result on 60th percentile. On this percentile, the effective minimum wage will increases the gap between the 60th percentile and the 50th percentile, this result implies a spillover.

State Minimum Wage Laws as a Response to Federal Inaction

2021 ◽  
pp. 0160323X2110008
Author(s):  
Shanna Rose
Keyword(s):  
Minimum Wage ◽  
Federal Policy ◽  
Minimum Wages ◽  
Annual Rate ◽  
Policy Agenda ◽  
State Activity ◽  
Dollar Amount ◽  
Ballot Measure ◽  
State Legislative

This article analyzes state legislative and ballot measure activity related to the minimum wage between 2003 and 2020. The analysis distinguishes proposals to raise the minimum wage from those to index it to the annual rate of inflation, and examines the proposed dollar amount, the process used (legislation vs. ballot measure), and the measure’s success or failure. The analysis suggests that state activity tends to increase when the minimum wage rises on the federal policy agenda, and that partisanship and ideology also play a central role in efforts to raise and index state minimum wages.

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