Education and the minimum wage in the United States

This article shows that, across the US states, the level of education has a causal effect on the minimum wage. More specifically, it argues that a one-percentage point increase in the proportion of college graduates implies a 0.4–0.5% decrease in the real value of the minimum wage. This is the first article that uses System GMM in order to examine the effect of education on the minimum wage. Given the structure of the available data, this is the most appropriate econometric technique. System GMM not only controls for endogeneity and for fixed effects but also maximizes the precision of the estimates by using all the available variation in the data.     

The effect of minimum wage on poverty

To the best of my knowledge, the minimum wage's influence on poverty in Russia has never been investigated. Russian data provide a unique opportunity for studying the effects of the minimum wage on poverty, given significant increases in the minimum wage in recent years, almost complete coverage, and a high representation of full-time workers in poor households. This article examines the effect of the minimum wage on the incidence of poverty and the transitions into and out of poverty in Russia using data from the Russia Longitudinal Monitoring Survey of Higher School of Economics (RLMS-HSE) from 2006 to 2011. The results indicate that the minimum wage in Russia had moderate poverty-reducing effects.     

The minimum wage and the Lithuanian labour market

This paper presents a comprehensive and non‐standard labour market analysis based on univariate and multivariate models for wages. The novelty of this paper lies in the use of non‐normalized cointegrating vectors for labour market analysis. Wages are the basis of labour market models, as well as the key factor for employees and employers; therefore, the central analytical axis is a classical wage bargaining process, where one side requires and the other side proposes a certain level of wages. Analysis is divided into two parts: foremost, a careful analysis of Lithuanian wages is conducted and a univariate model for the investigation of interactions between the minimum wage and the rest of the wages is proposed; only after the minimum wage model is drafted can the multivarate model for the whole economy be built up. Briefly, the methodology used in this article can be annotated as a synthesis of sequential theoretical and empirical considerations that combine the results of theoretical macroeconomics with data‐generating patterns and stylized facts. The model is considered as the final one only if macro‐theory preconditions, statistical prerequisites, and stylized real‐world requirements are met and fulfilled. In addition, this article gives an example and a quantitatively, as well as qualitatively, motivated suggestion as to how to incorporate minimum wages into econometric models and puts forward an explanation for why it is necessary to include minimum wage dynamics into labour market analysis. The article is nothing but an empirical case study that demonstrates how many minor details have to be taken into account until a realistic labour market model is built up. Although the paper deals with the labour market, the suitable application of time series methods is the main subject of the analysis.     

A mathematical note on Msgr. John A. Ryan's thought on the minimum wage

This paper examines Msgr. John A. Ryan's economic thought regarding the mechanics by which an increase in the minimum wage is funded. In particular, a mathematical comparative-static model is used to explore Msgr. Ryan's economic assumptions concerning the channels by which income is redistributed to workers from other factor owners. The analysis shows that Msgr. Ryan's approach includes assumptions regarding economic relationships and implies specific values of wage elasticities.     

Combining minimum wage and exchange rate policy to release the external constraint on growth

In this article we analyse the combination of a minimum wage and a devaluation/depreciation so as to release the external constraint on growth. The policy maker aims at achieving both balanced trade and higher growth. These may be reached by devaluating the domestic currency, which however supports traditional industries characterized by high price elasticity and low income elasticity of demand. The release of the external constraint in the short term then yields a stronger constraint in the longer term. If traditional industries are unskilled and labour‐intensive, the setting of a minimum wage distorts the specialization towards sectors with high demand growth. Devaluation/depreciation and minimum wage may thus be combined to release both the short term and longer term external constraint. We determine the condition for such a policy to be efficient. This combined policy must come with an educational policy that supports skill upgrading. It is typically tailored to ‘advanced emerging countries’ which aim at changing their specialization without slowing their growth.     

The effect of minimum wage on firm markup: Evidence from China

Our paper examines the impact of minimum wage on firm markup in China. We find that minimum wage generates a positive effect on firm markup. More value-enhancing innovative activities, TFP improvement, and efficient labor resource allocation are the potential channels. Further, the positive influence of minimum wage is more pronounced for privately-owned firms, for firms with higher labor intensity and firms with less financial constraints. Besides, these findings are generally robust to different estimation methods. Our results provide new insights into understanding the channels through which labor regulation may cause the change of markup for the emerging markets countries.     

Comparing employment estimates using different minimum wage variables: the case of Brazil

Several minimum wage variables have been suggested in the literature to estimate the effect of the minimum wage on employment. The most common ones are the real minimum wage, the ‘Kaitz index’, the ‘fraction affected’, the ‘fraction at’ and the ‘fraction below’. This diversity of variables makes it difficult to compare the associated estimates across studies. One problem is that these estimates are not always calibrated to represent the employment effect of a 1% minimum wage increase. Another problem is that these estimates measure employment effects for different groups of workers. In this paper we critically compare employment effect estimates using these five minimum wage variables and data from a Brazilian monthly household survey panel from 1982 to 2000. Our principal finding is that the sign of this effect is robust across the different minimum wage variables, but that its magnitude and significance are sensitive to the minimum wage variable used.     

The German generation internship and the minimum wage introduction: evidence from big data

The new German minimum wage applies a specific exemption clause for internships, where internships that last up to three months are exempted while internships that exceed three months are due to the minimum wage. Negative minimum wage effects on internships are heavily debated as internships are mostly non-productive. Difference-in-difference analyses that exploit establishment and regional variation in the bite of the minimum wage do not show a reduction in the number of internships. In addition, we pursue an innovative approach by using Google search data to analyse how the search intensity for internships changed in course of the minimum wage introduction. Difference-in-difference comparisons with other countries in Europe do not reveal an effect on the search for internship positions in general, but we observe a significant reduction in Google search for ‘generation internship’. This suggests that the underlying societal phenomenon of a generation entering internships without a perspective for regular jobs has lost in relevance.     

A regional analysis of flows into and out of the UK national minimum wage

This article utilizes the panel element of the UK Labour Force Survey (LFS) to identify for individual regions total inflows and outflows and hazards for those individuals paid at or below the National Minimum Wage (NMW). In particular, it examines the extent and direction of the correlation between low-pay inflows and outflows and the economic cycle. Further, it examines the impact of regional variations in the bite of the NMW on regional flows into and out of the NMW.     

The endogenous national minimum wage institution

This paper offers reasoning for the endogenous sustainability of the National Minimum Wage Institution (NMWI). In an economy with asymmetries in productivity among unionized firms, high-tech firms may often opt for minimum wage agreements covering all unionized workers, in order to raise the relative costs of their rival low-tech firms. Their workers’ unions as well as the unions of workers in low-tech firms share this interest, provided that the degree of product substitutability is not too low and the wage agreement is not too high. Hence, since economy-wide minimum wage agreements prove to be compatible with the interest of all unions and high-tech firms, the NMWI can be sustained in equilibrium under politically convenient circumstances.     

The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach

There is a vast literature that estimates the effect of the minimum wage on wage inequality in various countries. However, as the minimum wage directly affects nonlabor income of families in some countries (in the Brazilian case via the benefits of the pension system and of certain social programs), this article extends the empirical analysis by studying the effects of the minimum wage on the level of inequality of household income as a whole. To accomplish that we employ a decomposition method that gauges the contribution of the increases in the minimum wage that occurred in recent decades in Brazil through the labor and nonlabor sources of household income. The results show that the minimum wage had a contribution of 64 percent to the observed fall in income inequality between 1995 and 2014 and that pensions were the most relevant channel over this period.     

Spillover effects of a minimum wage increase – evidence from Slovenia

This article Analysis the effects of a large increase in Slovenia’s minimum wage in March 2010 on the wage distribution using an administrative matched employer–employee panel database. We find that the minimum wage hike increased the concentration of low-paid workers, creating a much more pronounced spike at the minimum, particularly in market services, and for the young, the least educated and those with the least work experience. Our analysis also shows that the March 2010 minimum wage increase also produced sizeable spillover effects. The spillover effects were higher among young and older workers, especially for wage levels near the new minimum wage. The results are based on a difference-in-differences approach comparing changes in wages during the control and treatment periods as experienced by workers in the wage group immediately above the level of the new minimum wage and workers in wage groups higher up in the wage distribution.     

The heterogeneous regional effects of minimum wages in Poland

We evaluate the impact of large minimum wage hikes on employment and wage growth in Poland between 2004 and 2018. We estimate panel data models utilizing the considerable variation in wage levels, and in minimum wage bites, across 73 Polish NUTS 3 regions. We find that minimum wage hikes had a significant positive effect on wage growth and a significant negative effect on employment growth only in regions of Poland that were in the first tercile of the regional wage distribution in 2007. These effects were moderate in size, and appear to be more relevant for wages. Specifically, if the ratio of minimum wage to average wage had remained constant after 2007, by 2018, the average wages in these regions would have been 3.2% lower, while employment would have been 1.2% higher. In the remaining two-thirds of Polish regions, we find no significant effects of minimum wage hikes on average wages or on employment.     

The impact of minimum wages and foreign domestic workers in Taiwan

The purpose of setting the minimum wage is mainly to protect the rights and interests of vulnerable workers and to enhance productivity of labour. In this paper, an attempt has been made to explore the effect of the upwards adjustment of the minimum wage in Taiwan on the inflation rate, the unemployment rate, labour productivity, economic growth and other macroeconomic variables by means of an analysis of empirical data using a structural vector auto‐regressive model. The findings of the paper show that upwards adjustment of the minimum wage in Taiwan will not intensify the unemployment rate. On the contrary, it will help to promote labour productivity to an extent that will have a positive effect on the economic growth rate. In addition, this paper investigates, long‐term care system should incorporate the foreign domestic worker labour pool, which could provide the additional personnel necessary for the nation's long‐term care. Minimum wage should apply to foreign domestic workers, and foreign domestic workers should not be treated as a separate group of workers in minimum wage policy.     

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.     

Ownership and corporate wage policy: the signal and its strength

We argue that identification and proper specification of ownership links among firms is an important factor and is affecting firm performance on different dimensions. We focus on the corporate wage policy, where we show that firms with same stockholders have similar average labour costs after controlling for standard factors of the wage equation. Moreover, we propose new measures of stockholders’ ability to influence firms’ decision; signal and its strength. The signal measures stockholder’s preferences over a given corporate policy, while the strength function describes stockholder’s ability to influence a firms’ corporate policy.     

The dynamics of wage determination in Romania

This article examines wage developments in Romania over the last 20 years, discusses the evolving role of government wage policy and structural labour market changes, and analyses the dynamics of the wage determination process. It finds that government wage policy has had a significant demonstration effect on private sector wages, driven mainly by policy decisions over the past few years. The article also finds strong causality from private sector wages to wages in state‐owned enterprises (SOEs) and government. No causality was found for changes in government wages to wages in SOEs or from SOE wages to private sector wages.     

Employment effects of introducing a minimum wage: The case of Germany

Income inequality has been a major concern of economic policy makers for several years. Can minimum wages help to mitigate inequality? In 2015, the German government introduced a nationwide statutory minimum wage to reduce income inequality by improving the labour income of low-wage employees. However, the employment effects of wage increases depend on time and region specific conditions and, hence, they cannot be known in advance. Because negative employment effects may offset the income gains for low-wage employees, it is important to evaluate minimum-wage policies empirically. We estimate the employment effects of the German minimum-wage introduction using panel regressions on the state-industry-level. We find a robust negative effect of the minimum wage on marginal and a robust positive effect on regular employment. In terms of the number of jobs, our results imply a negative overall effect. Hence, low-wage employees who are still employed are better off at the expense of those who have lost their jobs due to the minimum wage.     

The impact of education expansion on wage inequality

The findings on education expansion and income inequality have important implications for policymakers to implement effective policies to reduce income inequality. This study attempts to explain how education expansion affects income inequality by education distribution and the rate of return to education. We decompose the effect of education expansion on wage gaps into price effect and structure effect. We compare the income inequality from 2002 to 2013 using the Chinese Household Income Project (CHIP) 2002 and CHIP2013 survey data and employ FFL decomposition method. Our findings suggest that income inequality increased in 2013 and that income inequality among the high-income groups increased even more significantly. The structure effect of education expansion on income inequality is negative, when average education increases one year, the income gap between 80th and 20th will decrease 1.2%, in other words, education expansion decreases income inequality by allowing a wide range of individuals to attend college. However, this effect is offset by the price effect, which is positive and much more significant in magnitude. One extra year of average education will increase income gap by 29% which means that the demand for high-skilled labour is increasing faster than the supply and thus lead to the increasing premium for higher education return.     

The evolving nature of the college wage premium

Focusing on the signaling aspect of education, we show that the college wage premium can be U-shaped in the share of the population with a college degree. This prediction is consistent with empirical evidence from a range of countries. Moreover, the equilibrium in our model is unique, which means that we are able to generate empirically-testable predictions linking income inequality and the premium enjoyed by the college educated. Consequently, our model provides a framework for future empirical studies.