scholarly journals Minimum Wages and Firm Profitability

2011 ◽  
Vol 3 (1) ◽  
pp. 129-151 ◽  
Author(s):  
Mirko Draca ◽  
Stephen Machin ◽  
John Van Reenen
Keyword(s):  
Simple Model ◽  
Market Power ◽  
Minimum Wage ◽  
Minimum Wages ◽  
Difference In Differences ◽  
Suggestive Evidence ◽  
Firm Profitability ◽  
Policy Information ◽  
The Impact

We study the impact of minimum wages on firm profitability, exploiting the changes induced by the introduction of a UK national minimum wage in 1999. We use pre-policy information on the distribution of wages to implement a difference-in-differences approach. Minimum wages raise wages, but also significantly reduce profitability (especially in industries with relatively high market power). This is consistent with a simple model where wage gains from minimum wages map directly into profit reductions. There is some suggestive evidence of longer run adjustment to the minimum wage through falls in net entry rates. (JEL J31, J38, L25)

Was it worth it? The impact of the German minimum wage on union membership of employees

2021 ◽  
pp. 0143831X2110358
Author(s):  
Simon Ress ◽  
Florian Spohr
Keyword(s):  
Propensity Score ◽  
Social Security ◽  
Labour Market ◽  
Propensity Score Matching ◽  
Minimum Wage ◽  
Trade Union ◽  
Union Membership ◽  
Difference In Differences ◽  
German Trade ◽  
The Impact

This contribution scrutinises how introducing a statutory minimum wage of EUR 8.50 per hour, in January 2015, impacted German employees’ decision with regard to union membership. Based on representative data from the Labour Market and Social Security panel, the study applies a logistic difference-in-differences propensity score matching approach on entries into and withdrawals from unions in the German Trade Union Confederation (Deutscher Gewerkschaftsbund, DGB). The results show no separate effect on withdrawals from or entries into unions after the minimum wage introduction for those employees who benefited financially from it, but a significant increase of entries overall. Thus, unions’ campaign for a minimum wage strengthened their position in total but did not reverse the segmentation of union membership patterns.

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 Impact of GRDP and RWP on Regional Minimum Wage

JEJAK ◽  
2020 ◽  
Vol 13 (2) ◽  
pp. 292-306
Author(s):  
Robert Tua Siregar ◽  
Hery Pandapotan Silitonga ◽  
Khairunnisah Lubis ◽  
Acai Sudirman
Keyword(s):  
Linear Regression ◽  
Multiple Linear Regression ◽  
Correlation Coefficient ◽  
Minimum Wage ◽  
Linear Regression Analysis ◽  
T Test ◽  
Minimum Wages ◽  
Market Demand ◽  
F Test ◽  
The Impact

The purpose of this research was to find out the effect of the percentage in development of Pematangsiantar city’s regional minimum wages, and the problem in this study how GRDP and RWP affect on the percentage of development of Regionl Minimum Wage at Pematangsiantar City. The method used was quantitative descriptive analysis. Data analysis used were Classic Assumption Test, Multiple Linear Regression, Correlation Coefficient, Determination, F-test and t-test object on RMW at Pematangsiantar city. Finding of research and results of the study can be summarized as follows: 1). The results of the multiple linear regression analysis test are  that the GRDP and RWP had a positive effect on the RMW of Pematangsiantar City, 2). The results of the correlation coefficient indicate that the GRDP and RWP of Pematangsiantar City on its RMW were at a very strong level, while the coefficient of determination of 67.5%  at high or low of the minimum wages can be explained by the GRDP and RWP, while the remaining  of 32.5% was influenced by other factors which were not included in this study, 3). Hypothesis Test for  F-test indicates that the GRDP and RWP influences significantly on Pematang city’s RMW, and for the t- test indicates that the GRDP and RWP had a positive and significant effect on the RMW in Pematangsiantar City from 2005 to 2018. This means that as the GRDP increases, the value of setting Pematangsiantar City's minimum wage in the following year will also increase, and vice versa. The increase of  laborers/workers demands will affect the standard of regioanalwages that will be determined, this happens  because wages will always adjust to the labor market demand. The stipulation of the minimum wage, it has an impact on GRDP in Pematangsiantar City, because the consumptive rate will be carried out in the place where it gets paid.

scholarly journals The Analysis of the Impact of GDP, FDI, Minimum Wage on Employment in Indonesia

2019 ◽  
Vol 2 (2) ◽  
pp. 53-62
Author(s):  
Thomson Sitompul ◽  
Yansen Simangunsong
Keyword(s):  
Minimum Wage ◽  
Direct Investment ◽  
Regression Models ◽  
Time Series Data ◽  
Minimum Wages ◽  
Series Data ◽  
Economic Sector ◽  
Linear Regression Models ◽  
The Impact ◽  
Multiple Linear Regression Models

Unlike the previous study in determinant of labor absorption, which focused on economic sector and took up regional scope, this paper examines the impact of Gross Domestic Product, Foreign Direct Investment and Minimum Wages on labor absorption in Indonesia which take the national scope and aggregate labor by using secondary series of time series data (1990-2015). This study contributes to the limited literature on aggregate employment and national scope as the impact of the minimum wage, GDP, FDI in developing countries, especially in Indonesia. By using multiple linear regression models, surprisingly, we find that GDP and Minimum Wages have a positive and significant impact to increase employment while FDI  does not affect employment in Indonesia.

scholarly journals City Limits: What Do Local-Area Minimum Wages Do?

2021 ◽  
Vol 35 (1) ◽  
pp. 27-50
Author(s):  
Arindrajit Dube ◽  
Attila Lindner
Keyword(s):  
Minimum Wage ◽  
Local Variation ◽  
Local Area ◽  
Minimum Wages ◽  
Level Variation ◽  
Early Evidence ◽  
Trade Offs ◽  
Federal Standard ◽  
The Impact ◽  
New Evidence

Cities are increasingly setting their own minimum wages, and this trend has accelerated sharply in recent years. While in 2010 there were only three cities with their own minimum wages exceeding the state or federal standard, by 2020 there were 42. This new phenomenon raises the question: is it desirable to have city-level variation in minimum wage polices? We discuss the main trade-offs emerging from local variation in minimum wage polices and evaluate their empirical relevance. First, we document what type of cities raise minimum wages, and we discuss how these characteristics can potentially impact the effectiveness of city-level minimum wage policies. Second, we summarize the evolving evidence on city-level minimum wage changes and provide some new evidence of our own. Early evidence suggests that the impact of the policy on wages and employment to date has been broadly similar to the evidence on state- and federal-level minimum wage changes. Overall, city-level minimum wages seem to be able to tailor the policy to the local economic environment without imposing substantial distortions in allocation of labor and businesses across locations.

Minimum Wages and Supporting Wage Growth

2018 ◽  
Author(s):  
Brian Nolan
Keyword(s):  
Minimum Wage ◽  
Real Wage ◽  
Wage Growth ◽  
Minimum Wages ◽  
Central Question ◽  
The Uk ◽  
Household Incomes ◽  
Rich Countries ◽  
The Impact ◽  
Over Time

This chapter addresses the central question of how governments can seek to underpin real wage growth for working households over time. It looks first at the role that minimum wages can play in supporting wages and household incomes in the middle as well as lower parts of the distribution. This is investigated through a simulation exercise looking at the impact of a substantial increase in the minimum wage in the UK, bringing out the broader lessons to be learned for rich countries. A variety of other routes through which policy might seek to support wage growth are then set out and discussed.

How effective are enforcement measures for compliance with the minimum wage? Evidence from Germany

2020 ◽  
pp. 0143831X2096219
Author(s):  
Mario Bossler ◽  
Ursula Jaenichen ◽  
Simeon Schächtele
Keyword(s):  
High Risk ◽  
Minimum Wage ◽  
Minimum Wages ◽  
Difference In Differences ◽  
Hours Worked ◽  
Enhancing Effect ◽  
Employment Data

The extent of non-compliance with minimum wages is heavily debated, but little is known about the effectiveness of enforcement measures. Following the introduction of a national minimum wage in Germany in 2015, employers in a catalogue of industries deemed at high risk of non-compliance were subject to more stringent enforcement requirements, such as an obligation to record hours worked. Using national administrative employment data, in this study the authors exploit the variation in enforcement measures to analyze the effect on non-compliance. As an empirical strategy, they balance jobs from industries with stricter enforcement measures with jobs from other industries and apply difference-in-differences estimations. The evidence points to a small compliance-enhancing effect of the enforcement measures. The gains in compliance are not offset by more pronounced employment losses in those industries subject to stricter enforcement.

Book Reviews

2013 ◽  
Vol 51 (2) ◽  
pp. 558-560
Keyword(s):  
Labor Market ◽  
Minimum Wage ◽  
Job Search ◽  
Labor Market Outcomes ◽  
Minimum Wages ◽  
New York University ◽  
Market Outcomes ◽  
Welfare Impacts ◽  
Wage Effects ◽  
The Impact

Etienne Wasmer of Sciences Po and LIEPP reviews, “The Minimum Wage and Labor Market Outcomes” by Christopher J. Flinn. The Econlit abstract of this book begins: “Presents a model based on search and bargaining to use in investigating the impact of a minimum wage on labor market outcomes. Discusses descriptive evidence on minimum wage effects; a model of minimum wage effects on labor market careers; labor market and welfare impacts of minimum wages; minimum wage effects on labor market outcomes—a selective survey; assessing the welfare impacts of actual changes in the minimum wage; econometric issues; model estimates and tests; optimal minimum wages; the on-the-job search; and heterogeneity. Flinn is Professor of Economics at New York University and Senior Research Fellow at Collegio Carlo Alberto.”

scholarly journals Using Occupations to Evaluate the Employment Effects of the German Minimum Wage

2020 ◽  
Vol 240 (2-3) ◽  
pp. 269-294 ◽  
Author(s):  
Martin Friedrich
Keyword(s):  
Minimum Wage ◽  
West Germany ◽  
Difference In Differences ◽  
Regional Effect ◽  
Employment Effects ◽  
Regular Employment ◽  
Short Run ◽  
Wage Floor ◽  
Effect Heterogeneity ◽  
The Impact

AbstractThis paper evaluates the short to medium run employment effects of the 2015 introduction of a statutory minimum wage in Germany. The effect of the policy is recovered from variation in the bite of the minimum wage across occupations using a difference-in-differences estimator. The analysis reveals that the reform only had a small impact on employment and highlights the importance of regional effect heterogeneity. In East Germany, marginal employment decreased by about 18,000 jobs in the short run and 52,000 jobs in the medium run, respectively, due to the minimum wage. In West Germany, no negative employment effects are detectable, but regular employment increased temporarily because of the reform. The medium run estimates include the impact of the first marginal increase of the wage floor from €8.50 to €8.84 in 2017.

scholarly journals The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the U.K. Wages Councils

ILR Review ◽  
1994 ◽  
Vol 47 (2) ◽  
pp. 319-329 ◽  
Author(s):  
Stephen Machin ◽  
Alan Manning
Keyword(s):  
United Kingdom ◽  
Minimum Wage ◽  
Minimum Wages ◽  
Average Wage ◽  
Wage Dispersion ◽  
The United Kingdom ◽  
Dramatic Decline ◽  
Using Data ◽  
The Impact ◽  
Positive Effect

Using data on Wages Council coverage from the United Kingdom New Earnings Survey, the authors examine the impact of mandated minimum wages on wage dispersion and employment in the United Kingdom in the 1980s. They find evidence that a dramatic decline in the toughness of the regulation imposed by the Wages Councils through the 1980s—a decline, that is, in the level of the minimum wage relative to the average wage—significantly contributed to widening wage dispersion over those years. There is, however, no evidence of an increase in employment resulting from the weakening bite of the Wages Council minimum pay rates. Instead, consistent with the conclusions of several recent U.S. studies, the findings suggest that the minimum wage had either no effect or a positive effect on employment.

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