WHEN IS A GOOD TIME TO RAISE THE MINIMUM WAGE?

I analyze changes in the target efficiency of the federal minimum wage over the past 25 years. Using static simulation methods I find that minimum wage target efficiency is currently close to its 25‐year peak—of the total monetary benefits generated by a 12% increase in the federal minimum wage, 16.8% would flow to workers in poverty. This exceeds the least target efficient year over this period by 4.7 percentage points and is only 0.6 percentage points below the peak. Furthermore, I find a very strong positive relationship between minimum wage target efficiency and the real federal minimum wage. The implication is that, from an efficiency standpoint, a good time to raise the minimum wage is when it is already high. This discovery raises the possibility that the minimum wage increases the employment of low‐skilled poor individuals relative to the employment of low‐skilled non‐poor individuals. Moreover, this discovery may bolster the rationale for an indexed minimum wage whereby it is prevented from falling to less efficient levels. (JEL J21, J31, J38)     

MINIMUM WAGES AND HEALTHY DIET

A healthy diet is often unaffordable for low‐income individuals, so income‐lifting policies may play an important role in not only alleviating poverty but also in improving nutrition. We investigate if higher minimum wages can contribute to an improved diet by increasing consumption of fruits and vegetables. Exploiting recent minimum wage increases in the United States and using individual‐level data from the Behavioral Risk Factor Surveillance System we identify the causal effect of minimum wage changes on fruit and vegetable intake among low‐wage individuals in a triple‐differences framework. The estimated minimum wage elasticity of fruit and vegetable consumption equals 0.12. (JEL I12, I18, J38)     

THE IMPACT OF THE MINIMUM WAGE ON FEMALE EMPLOYMENT IN JAPAN

This article examines the impact of the minimum wage on employment, focusing on women in their 20s and 30s, who are known to be typical low‐wage workers in Japan. The results, based on a panel estimation, suggest that the minimum wage has a measurable impact on employment; the workers whose current wage is below the revised minimum wage are about 20–30 percentage points less likely to be employed in the following year than comparable low‐wage workers who are not affected by the revision of the minimum wage. The estimation results are sensitive to the choice of the control group. (JEL J23, J38, J88)     

Worker flows, job flows and firm wage policies

Like many transition economies, Slovenia is undergoing profound changes in the workings of the labour market with potentially greater flexibility in terms of both wage and employment adjustment. To investigate the impact of these changes, we use unique longitudinal matched employer‐employee data that permits measurement of employment transitions and wages for workers and enables links of the workers to the firms in which they are employed. We can thus measure worker flows and job flows in a comprehensive and integrated manner. We find a high pace of job flows in Slovenia especially for young, small, private and foreign‐owned firms and for young, less educated workers. While job flows have approached the rates observed in developed market economies, the excess of worker flows above job flows is lower than that observed in market economies. A key factor in the patterns of the worker and job flows is the determination of wages in Slovenia. A base wage schedule provides strict guidelines for minimum wages for different skill categories. However, firms are permitted to offer higher wages to an individual based upon the success of the worker and/or the firm. Our analysis shows that firms deviate from the base wage schedule significantly and that the idiosyncratic wage policies of firms are closely related to the observed pattern of worker and job flows at the firm. Firms with more flexible wages (measured as less compression of wages within the firm) have less employment instability and are also able to improve the match quality of their workers. JEL Classifications: J23, J31, J41, J61, P23, P31.     

Minimum Wages and the Gender GAP in Pay: New Evidence from the United Kingdom and Ireland

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.     

The impact of minimum wages on employment of low‐wage workers

This study provides empirical evidence on the impact of a minimum wage increase on employment of workers in the formal sector who have wages below the minimum level in Vietnam. Using the difference‐in‐differences with propensity score matching and the Vietnam Household Living Standard Surveys of 2004 and 2006, the article finds that the minimum wage increase in 2005 reduced the proportion of workers having a formal sector job among low‐wage workers. Most workers who lost formal sector jobs became self‐employed.     

MINIMUM WAGES AND GROSS DOMESTIC PRODUCT

This study is the first to explore the relationship between minimum wage increases and state gross domestic product (GDP). Using data drawn from the Bureau of Economic Analysis (BEA) and the Current Population Survey (CPS) from 1979 to 2012, I find no evidence that minimum wage increases were associated with changes in overall state GDP. However, this null finding masks substantial heterogeneity in the productivity effects of minimum wages across industries and over the business cycle. Difference‐in‐difference‐in‐difference estimates suggest that a 10% increase in the minimum wage is associated with a short‐run 1% to 2% decline in state GDP generated by lower‐skilled industries relative to more highly skilled industries. This differential appears larger during troughs as compared to that during peaks of the state business cycle. (JEL J3, J4, L5)     

A NOTE ON THE NONLINEAR EFFECT OF MINIMUM WAGE INCREASES

We use a labor search model with worker experience to assess the effects of minimum wage increases. Minimum wages can have nonlinear effects on unemployment as higher minimum wages become binding for larger portions of the underlying productivity distribution. The model is used to assess the increases proposed by the Obama Administration from $7.25 an hour to $9.00 and then to $10.10 per hour. We find that minimum wage increases have large effects on youth unemployment. These large effects cast doubt on using past empirical estimates of the effects of minimum wages that do not account for potential nonlinearities. (JEL E24, J08, J24, J64)     

Assessing the Possible Antipoverty Effects of Recent Rises in Age‐Specific Minimum Wages in New Zealand

Real minimum wages increased by nearly 33 percent for adults and 123 percent for teenagers in New Zealand between 1999 and 2008. Where fewer than 2 percent of workers were being paid a minimum wage at the outset of this sample period, more than 8 percent of adult workers and 60 percent of teenage workers were receiving hourly earnings close to the minimum wage by the end of this period. These policy changes provide a unique opportunity to estimate the effects of the minimum wage on poverty. Although minimum wage workers are more likely to live in the poorest households, they are relatively widely dispersed throughout the income distribution. This is particularly true of teenage minimum wage workers. Furthermore, low‐income households often do not contain any working members. We estimate that a 10 percent increase in minimum wages, even without a loss in employment or hours of work, would lower the relative poverty rate by less than one‐tenth of a percentage point.     

The Causal Effects of the Minimum Wage Introduction in Germany – An Overview

In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short‐run effects of this new minimum wage on a wide set of socioeconomic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self‐employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non‐compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low‐wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialised in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non‐compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide reaching policy.     

LONGER‐RUN EFFECTS OF ANTI‐POVERTY POLICIES ON DISADVANTAGED NEIGHBORHOODS

We assess evidence on the longer‐run effects of minimum wages, the Earned Income Tax Credit, and welfare on key economic indicators of economic self‐sufficiency in disadvantaged neighborhoods. The evidence suggests that the longer‐run effects of the Earned Income Tax Credit are to increase employment and to reduce poverty and public assistance. We also find some evidence consistent with higher welfare benefits having longer‐run adverse effects, and stronger evidence that tighter welfare time limits reduce poverty and public assistance in the longer‐run. The evidence on the longer‐run effects of the minimum wage on poverty and public assistance is not robust. (JEL J22, J23, J38)     

Minimum Wage: Does it Improve Welfare in Thailand?

We study the causal impact of the minimum wage on labor market outcomes, household consumption, inequality and poverty in Thailand by relying on policy variation in minimum wages over time across provinces. We find that minimum‐wage increases have a large and significant impact on the likelihood of working in the uncovered sector among workers with elementary education. However, the impact is very small and insignificant among other labor market groups. In contrast, the minimum wage has large positive effects on the formal sector wages of low‐earning workers, such as the young, elderly and low educated. Increases in the minimum wage are associated with reductions in household poverty and consumption inequality at the bottom half of the distribution.     

最低工资标准提升的就业效应——一个基于自然实验的经验研究

本文以最低工资标准提升作为自然实验,应用回归调整的差中差方法分析了最低工资标准提升对青年和中年低技能劳动力就业的影响。研究结果表明,最低工资标准提升对低技能群体中的男性和青年女性的就业没有产生显著影响;但对低技能群体中的中年女性就业却产生显著的消极影响,且最低工资标准提升幅度越大,对就业的消极影响越大。因此,政府适当的提升最低工资标准将有助于低技能劳动力整体工资水平的增长。     

Robert Torrens and the Ricardian model of dynamic equilibrium growth

This paper reconstructs Torrens's dynamic theory of distribution which is based on three notions of wages. In the early stages of growth, capital increases faster than population, so the actual wage rises above the minimum. Thereafter, the economy grows with a tendency for the population to increase faster than the capital while limiting the actual wage below the decreasing maximum until it enters a stationary state and the actual wage and profit rates are reduced to their minimum. Such a theory has been attributed to Ricardo by some scholars, but Torrens proposed a more fully developed account than Ricardo's.     

Can Minimum Wages Raise Workers’ Incomes in the Long Run?

Using an intertemporal model of saving and capital accumulation with two types of agents we demonstrate that it is impossible for any binding minimum wage to increase the after‐tax incomes of workers if the production function is Cobb–Douglas with constant returns to scale, or if there are no differences in ability among workers. Moreover, it is impossible to increase the incomes of employed workers through minimum wage legislation, even under decreasing returns to scale and heterogeneity of ability among workers, unless the support provided to unemployed workers is far below what they would earn in the absence of minimum wages.     

MINIMUM WAGE EFFECTS ON PERMANENT VERSUS TEMPORARY MINIMUM WAGE EMPLOYMENT

We estimate the effect of minimum wages on employment using the Master Files of the Canadian Labour Force Survey over the recent period 1997–2008. Particular attention is paid to the differences between permanent and temporary minimum wage workers—an important distinction not made in the existing literature. Our estimates for permanent and temporary minimum wage workers combined are at the lower end of estimates based on Canadian studies estimated over earlier time periods, suggesting that the adverse employment effects are declining over time for reasons discussed. Importantly, the adverse employment effects are substantially larger for permanent compared to temporary minimum wage workers; in fact they fall almost exclusively on permanent minimum wage workers. (JEL J30)     

Wage inequality in Turkey, 2002–10

This paper studies the evolution of wage inequality in Turkey using household labour force survey data from 2002 to 2010. Between 2002 and 2004, the relative supply of more‐educated workers to less‐educated workers remained constant while their relative wages decreased in favour of less‐educated workers. However, between 2004 and 2010, the relative supply of more‐educated workers to less‐educated workers rose, while their relative wages remained constant or kept increasing in favour of more‐educated workers. This suggests factors other than those implied by a simple supply‐demand model are involved, such as skill‐biased technical change or minimum wage variations. The decomposition of wage inequality reveals that the price (wage) effect dominates the composition effect particularly in the first period. Our results show that the real minimum wage hike in 2004 corresponds to a major institutional change, which proved to be welfare‐increasing in terms of wage inequality. The upper‐tail (90/50) wage inequality decreased between 2002 and 2004 and stayed constant thereafter, whereas the lower‐tail (50/10) wage inequality decreased throughout the period. Our findings thus provide evidence supporting the institutional argument for explaining wage inequality.     

IMMIGRANT RELATIVE WAGES AT THE GREAT RECESSION: EVIDENCE WITH MATCHED EMPLOYER‐EMPLOYEE DATA FOR SPAIN

The article examines relative wages of immigrants in Spain, with a particular focus on the impact of the Great Recession. The empirical analysis is restricted to men and is based on matched employer‐employee microdata and the decomposition techniques of Juhn et al. (1991, 1993) and Fortin et al. (2011). Our results show that the significant native‐immigrant wage gap that exists both in terms of average wages and of differentials along the wage distribution is essentially explained by differences in the endowments of observed characteristics so that, in general, immigrants tend to receive a similar wage treatment than Spaniards with analogous observed attributes. On the other hand, the Great Recession has had a noticeable impact on the relative wages of immigrants, given that the significant increase of the native‐immigrant wage gap observed during the previous expansionary period was mitigated during the economic downturn due to composition effects arising from the severe employment destruction pattern.     

EMPLOYMENT VERIFICATION MANDATES AND THE LABOR MARKET OUTCOMES OF LIKELY UNAUTHORIZED AND NATIVE WORKERS

As recent efforts to reform immigration policy at the federal level have failed, states have started to take immigration matters into their own hands and researchers have been paying closer attention to state dynamics surrounding immigration policy. Yet, to this date, there is not a clear understanding of the consequences of enforcing E‐Verify on likely unauthorized immigrants or on natives across the United States. This study aims to fill in that gap by analyzing the impact that the enactment of various types of E‐Verify mandates may have on the employment and wages of these groups. We find that the enactment of employment verification mandates reduces the employment likelihood of likely unauthorized workers. Additionally, it raises the hourly wages of likely unauthorized women. None of these impacts are observed among a similarly skilled sample of naturalized Hispanic immigrants. Finally, the enactment of E‐Verify mandates appears to raise the employment likelihood of alike non‐Hispanic natives, while raising the hourly wage of native‐born male employees, alluding to the potential substitutability of unauthorized immigrants and non‐Hispanic natives. (JEL J2, J3, J6)     

On economic growth and minimum wages

We offer an analysis of the existence of a positive relationship between minimum wages and economic growth in a simple one-sector overlapping generations economy à la Romer (J Polit Econ 94:1002–1037, 1986), in the case of both homogeneous and heterogeneous labour and without considering any growth-sustaining externalities which the minimum wage can generate. Assuming also the existence of unemployment benefits financed with balanced-budget consumption taxes not conditional upon age, we show that the minimum wage can promote economic growth and welfare despite the occurrence of unemployment. There may also exist a growth- and welfare-maximising minimum wage.