The Effect of Minimum Wages on Low-Wage Jobs Cengiz, Doruk; Dube, Arindrajit; Lindner, Attila ...
The Quarterly journal of economics,
08/2019, Volume:
134, Issue:
3
Journal Article
Peer reviewed
Open access
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.
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.
We use policy discontinuities at state borders to identify the effects of minimum wages on earnings and employment in restaurants and other low-wage sectors. Our approach generalizes the case study ...method by considering all local differences in minimum wage policies between 1990 and 2006. We compare all contiguous county-pairs in the United States that straddle a state border and find no adverse employment effects. We show that traditional approaches that do not account for local economic conditions tend to produce spurious negative effects due to spatial heterogeneities in employment trends that are unrelated to minimum wage policies. Our findings are robust to allowing for long-term effects of minimum wage changes.
Workers' wages are not set in a spot market. Instead, the wages of most workers—at least those who do not switch jobs—typically change only annually and are mediated by a complex set of institutions ...and factors such as contracts, unions, standards of fairness, minimum wage policy, transfers of risk, and incomplete information. The goal of the International Wage Flexibility Project (IWFP)—a consortium of over 40 researchers with access to individual workers' earnings data for 16 countries—is to provide new microeconomic evidence on how wages change for continuing workers. We investigate the extent of wage flexibility, with a particular focus on the extent of downward wage rigidity; and explore how measures of wage flexibility are affected by the wage-setting regimes that typically vary by country.
We present new evidence from a unique survey of firms across Europe on downward wage rigidity in both real and nominal terms. Our results indicate that wage rigidities are related to workforce ...composition in a manner that is consistent with related theoretical models. We also find that wage rigidity depends on the labour market institutional environment. Collective bargaining coverage is positively related with downward real wage rigidity, measured on the basis of wage indexation. Downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations.
Three quarters of all violence against women is perpetrated by domestic partners. This study exploits exogenous changes in the demand for labor in female-dominated industries to estimate the impact ...of the male-female wage gap on domestic violence. Decreases in the wage gap reduce violence against women, consistent with a household bargaining model. These findings shed new light on the health production process as well as observed income gradients in health and suggest that in addition to addressing concerns of equity and efficiency, pay parity can also improve the health of American women via reductions in violence.
Rethinking the effect of immigration on wages Ottaviano, Gianmarco I. P.; Peri, Giovanni
Journal of the European Economic Association,
February 2012, Volume:
10, Issue:
1
Journal Article
Peer reviewed
Open access
"This paper calculates the effects of immigration on the wages of native US workers of various skill levels in two steps. In the first step we use labor demand functions to estimate the elasticity of ...substitution across different groups of workers. Second, we use the underlying production structure and the estimated elasticities to calculate the total wage effects of immigration in the long run. We emphasize that a production function framework is needed to combine own-group effects with cross-group effects in order to obtain the total wage effects for each native group. In order to obtain a parsimonious representation of elasticities that can be estimated with available data, we adopt alternative nested-CES models and let the data select the preferred specification. New to this paper is the estimate of the substitutability between natives and immigrants of similar education and experience levels. In the data-preferred model, there is a small but significant degree of imperfect substitutability between natives and immigrants which, when combined with the other estimated elasticities, implies that in the period from 1990 to 2006 immigration had a small effect on the wages of native workers with no high school degree (between 0.6% and +1.7%). It also had a small positive effect on average native wages (+0.6%) and a substantial negative effect (-6.7%) on wages of previous immigrants in the long run." (Author's abstract, IAB-Doku). Die Untersuchung enthält quantitative Daten. Forschungsmethode: empirisch-quantitativ; empirisch; Längsschnitt. Die Untersuchung bezieht sich auf den Zeitraum 1990 bis 2006.
We investigate the impact of wage comparisons for worker productivity. We present three studies which all use three-person gift-exchange experiments. Consistent with
Akerlof and Yellen's (1990) fair ...wage–effort hypothesis we find that disadvantageous wage discrimination leads to lower efforts while advantageous wage discrimination does not increase efforts
on average. Two studies allow us to measure wage comparison effects at the individual level. We observe strongly heterogeneous wage comparison effects. We also find that reactions to wage discrimination can be attributed to the underlying intentions of discrimination rather than to payoff consequences.
We assess how changes in the social organization and compensation of work hours over the last three decades are associated with changes in wage differentials among mothers, fathers, childless women, ...and childless men. We find that large differences between gender and parental status groups in long work hours (fifty or more per week), coupled with sharply rising hourly wages for long work hours, contributed to rising gender gaps in wages (especially among parents), motherhood wage penalties, and fatherhood wage premiums. Changes in the representation of these groups in part-time work, by contrast, is associated with a decline in the gender gap in wages among parents and in the motherhood wage penalty, but an increase in the fatherhood wage premium. These findings offer important clues into why gender and family wage differentials still persist.
Women are disproportionately in low‐paid work compared to men so, in the absence of rationing effects on their employment, they should benefit the most from minimum wage policies. This study examines ...the change in the gender wage gap around the introduction of minimum wages in Ireland and the United Kingdom (U.K.). Using survey data for the two countries, we develop a decomposition of the change in the gender differences in wage distributions around the date of introduction of minimum wages. We separate out “price” effects attributed to minimum wages from “employment composition” effects. A significant reduction of the gender gap at low wages is observed after the introduction of the minimum wage in Ireland, while there is hardly any change in the U.K. Counterfactual simulations show that the difference between countries may be attributed to gender differences in non‐compliance with the minimum wage legislation in the U.K.
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