Ambiguous effects of minimum wage tool of labour markets regulation – key study of V4 countries

In this paper we analyze the effect of minimum wage change on selected labour market indicators such as duration of employment, hours worked, unemployment by education or profession or long-term unemployment. Our research is based on Eurostat and OECD data for V4 countries. The hypothesis discussed is whether the effect of minimum wage increase is positive or negative and we discuss the issue of economic regulation more generally. The output values of the regressions coefficients of all the V4 countries showed that the effects are more positive than negative. Mapping the overall intensity of effects of the minimum wage on selected indicator of the labour market in the Czech Republic and Hungary indicated a low sensitivity. The effects were very weak in Slovakia and Poland. The results of the analysis complied with the results of the domestic and international research in 13 cases and the results were different in 6 cases. Slightly more often they confirmed more positive effects of the minimum wage on selected indicators of the labour market than negative effects.

Aggregate Nominal Wage Adjustments: New Evidence from Administrative Payroll Data

Using administrative payroll data from the largest US payroll processing company, we measure the extent of nominal wage rigidity in the United States. The data allow us to define a worker’s per-period base contract wage separately from other forms of compensation such as overtime premiums and bonuses. We provide evidence that firms use base wages to cyclically adjust the marginal cost of their workers. Nominal base wage declines are much rarer than previously thought with only 2 percent of job-stayers receiving a nominal base wage cut during a given year. Approximately 35 percent of workers receive no base wage change year over year. We document strong evidence of both time and state dependence in nominal base wage adjustments. In addition, we provide evidence that the flexibility of new hire base wages is similar to that of existing workers. Collectively, our results can be used to discipline models of nominal wage rigidity. (JEL E24, E32, J31, J41)

Decent Work During the Pandemic: Indication and Profiling Matters

The article is devoted to the study of theoretical and applied aspects of decent work during the period of unstable economy development associated with the pandemic. The aim of research is to identify key labor trends, determine valid indicators and analyze decent work profiles at the level of the world community, Russia and its regions. The authors analyzed the decent work profiles at the beginning and during the downturn of the pandemic; studied the components of decent work in the economy as a whole and at the regional level. Special attention is paid to the criteria of profiling, which determine the necessary investment directions and formats in ensuring decent work conditions in the country context. Indicators and an integral indicator of decent work, taking into account the conditions of the pandemic, including unemployment; expenditure in GDP and payments against the subsistence minimum; loss of working time due to restrictive measures; the proportion of workers transferred to remote employment; Wage change rate; occupational safety index and others are proposed. The materials can be of practical value for the employment policy directions development at the regional and Federal levels of Russia, taking into account the current epidemiological situation and employment digitalization strategic priorities.

Affluent Lives Beyond the Border? Individual Wage Change Through Migration

This chapter investigates individual wage changes of German emigrants. The analytical strategy is twofold. First, we compare hourly wage changes among emigrants with wage changes among stayers. We estimate the Difference-in-Difference of mean net hourly wages between stayers and emigrants over time and account for the positive selection of emigrants on observable characteristics through entropy balancing. Second, we explore the heterogeneity of wage changes among emigrants. To that end, we calculate linear regressions on the log net hourly wage change through migration. The first analysis suggests substantial wage increases of 8 euros through migration. The second analysis provides evidence that characteristics of employment and of destination countries account for differences in the wage change among emigrants. Among individual characteristics, only age is negatively correlated, while education and gender do not account for differences. Our analysis rely on the first wave of the German Emigration and Remigration Panel Study. The German Socio-Economic Panel Study yields our reference population of stayers.

Wage Setting Behaviour of Firms in Industrial Estates of Khyber Pakhtunkhwa, Pakistan

The objective of the study is to analyze the wage setting behaviour of firms. For this study four major industrial estates of Khyber Pakhtunkhwa. Using stratified random sampling, data is collected from 342 firms. Multinomial logistic model is used to estimate the effects of determinants on wage change. Most of the firms change wage rate once in a year. Majority of the firms follow time-dependent wage policy. Half of the firms, which are following time-dependent wage policy, change the wage rate at the end or start of the fiscal year. Most of the firms are not found to index wages. Moreover, the percentage of firms not involved in wage indexation is higher for daily workers than for permanent worker. Labor productivity, employment level in the economy, government regulations, taxes, demand for the product, and inflation are important factors of wage change, but the most important factor is the labour productivity and least important is pressure from the labour union. Imperfect competition and size of the firms are the important determinants of wage flexibility, while wage indexation, information set of expected inflation and fringe benefits provided to workers are the important determinants of wage rigidity. It is important for Pakistan to avoid wage cuts at the times of recession and disinflationary policies be carefully designed as sacrifice ratio, albeit moderate, is not zero.

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

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.

Aggregation and Labor Supply Elasticities

We outline a formal procedure for deriving the aggregate wage-elasticity of labor supply for a large group of heterogeneous workers who operate under uncertainty. Heterogeneity relates to preferences, income, wealth, and the labor market status. If each worker faces a small, possibly nonuniform wage change, the implied aggregate wage-elasticity can be represented by a closed-form expression. This expression captures an extensive and an intensive margin. We empirically implement the procedure for a dynamic model of individual labor supply and a micro panel of men in Germany from 2000 to 2013. We find that the extensive margin is less time-varying than the intensive margin, and that its size varies with the measure of reservation wages. Self-reported reservation wages render a larger extensive margin than other proxies. The estimated aggregate Frisch wage-elasticity varies between 0.85 and 1.06, and the two margins matter equally strongly for the unbalanced sample.