Minimum Wages and Firm Employment

Minimum Wages and Firm Employment

Author: Yi Huang

Publisher: International Monetary Fund

Published: 2014-10-16

Total Pages: 47

ISBN-13: 1498332307

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This paper provides the first systematic study of how minimum wage policies in China affect firm employment over the 2000-2007 periods. Using a novel dataset of minimum wage regulations across more than 2,800 counties matched with firm-level data, we investigate both the effect of the minimum wage and its policy enforcement tightening in 2004. A dynamic panel (difference GMM) estimator is combined with a “neighbor-pairs-approach” to control for unobservable heterogeneity common to “border counties” that are subject to different minimum wage changes. We show that minimum wage increases have a significant negative impact on employment, with an estimated elasticity of -0.1. Furthermore, we find a heterogeneous effect of the minimum wage on employment which depends on the firm's wage level. Specifically, the minimum wage has a greater negative impact on employment in low-wage firms than in high-wage firms. Our results are robust for different treatment groups, sample attrition correction, and placebo tests.


Book Synopsis Minimum Wages and Firm Employment by : Yi Huang

Download or read book Minimum Wages and Firm Employment written by Yi Huang and published by International Monetary Fund. This book was released on 2014-10-16 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides the first systematic study of how minimum wage policies in China affect firm employment over the 2000-2007 periods. Using a novel dataset of minimum wage regulations across more than 2,800 counties matched with firm-level data, we investigate both the effect of the minimum wage and its policy enforcement tightening in 2004. A dynamic panel (difference GMM) estimator is combined with a “neighbor-pairs-approach” to control for unobservable heterogeneity common to “border counties” that are subject to different minimum wage changes. We show that minimum wage increases have a significant negative impact on employment, with an estimated elasticity of -0.1. Furthermore, we find a heterogeneous effect of the minimum wage on employment which depends on the firm's wage level. Specifically, the minimum wage has a greater negative impact on employment in low-wage firms than in high-wage firms. Our results are robust for different treatment groups, sample attrition correction, and placebo tests.

Myth and Measurement

Myth and Measurement

Author: David Card

Publisher: Princeton University Press

Published: 2015-12-22

Total Pages: 455

ISBN-13: 1400880874

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From David Card, winner of the Nobel Prize in Economics, and Alan Krueger, a provocative challenge to conventional wisdom about the minimum wage David Card and Alan B. Krueger have already made national news with their pathbreaking research on the minimum wage. Here they present a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers. In a work that has important implications for public policy as well as for the direction of economic research, the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990–91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs. A distinctive feature of Card and Krueger's research is the use of empirical methods borrowed from the natural sciences, including comparisons between the "treatment" and "control" groups formed when the minimum wage rises for some workers but not for others. In addition, the authors critically reexamine the previous literature on the minimum wage and find that it, too, lacks support for the claim that a higher minimum wage cuts jobs. Finally, the effects of the minimum wage on family earnings, poverty outcomes, and the stock market valuation of low-wage employers are documented. Overall, this book calls into question the standard model of the labor market that has dominated economists' thinking on the minimum wage. In addition, it will shift the terms of the debate on the minimum wage in Washington and in state legislatures throughout the country. With a new preface discussing new data, Myth and Measurement continues to shift the terms of the debate on the minimum wage.


Book Synopsis Myth and Measurement by : David Card

Download or read book Myth and Measurement written by David Card and published by Princeton University Press. This book was released on 2015-12-22 with total page 455 pages. Available in PDF, EPUB and Kindle. Book excerpt: From David Card, winner of the Nobel Prize in Economics, and Alan Krueger, a provocative challenge to conventional wisdom about the minimum wage David Card and Alan B. Krueger have already made national news with their pathbreaking research on the minimum wage. Here they present a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers. In a work that has important implications for public policy as well as for the direction of economic research, the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990–91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs. A distinctive feature of Card and Krueger's research is the use of empirical methods borrowed from the natural sciences, including comparisons between the "treatment" and "control" groups formed when the minimum wage rises for some workers but not for others. In addition, the authors critically reexamine the previous literature on the minimum wage and find that it, too, lacks support for the claim that a higher minimum wage cuts jobs. Finally, the effects of the minimum wage on family earnings, poverty outcomes, and the stock market valuation of low-wage employers are documented. Overall, this book calls into question the standard model of the labor market that has dominated economists' thinking on the minimum wage. In addition, it will shift the terms of the debate on the minimum wage in Washington and in state legislatures throughout the country. With a new preface discussing new data, Myth and Measurement continues to shift the terms of the debate on the minimum wage.

Modern Labor Economics

Modern Labor Economics

Author: Ronald G. Ehrenberg

Publisher: Routledge

Published: 2016-04-20

Total Pages: 684

ISBN-13: 1315510642

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For one-semester courses in labor economics at the undergraduate and graduate levels, this book provides an overview of labor market behavior that emphasizes how theory drives public policy. Modern Labor Economics: Theory and Public Policy, Twelfth Edition gives students a thorough overview of the modern theory of labor market behavior, and reveals how this theory is used to analyze public policy. Designed for students who may not have extensive backgrounds in economics, the text balances theoretical coverage with examples of practical applications that allow students to see concepts in action. Experienced educators for nearly four decades, co-authors Ronald Ehrenberg and Robert Smith believe that showing students the social implications of the concepts discussed in the course will enhance their motivation to learn. As such, the text presents numerous examples of policy decisions that have been affected by the ever-shifting labor market. This text provides a better teaching and learning experience for you and your students. It will help you to: Demonstrate concepts through relevant, contemporary examples: Concepts are brought to life through analysis of hot-button issues such as immigration and return on investment in education. Address the Great Recession of 2008: Coverage of the current economic climate helps students place course material in a relevant context. Help students understand scientific methodology: The text introduces basic methodological techniques and problems, which are essential to understanding the field. Provide tools for review and further study: A series of helpful in-text features highlights important concepts and helps students review what they have learned.


Book Synopsis Modern Labor Economics by : Ronald G. Ehrenberg

Download or read book Modern Labor Economics written by Ronald G. Ehrenberg and published by Routledge. This book was released on 2016-04-20 with total page 684 pages. Available in PDF, EPUB and Kindle. Book excerpt: For one-semester courses in labor economics at the undergraduate and graduate levels, this book provides an overview of labor market behavior that emphasizes how theory drives public policy. Modern Labor Economics: Theory and Public Policy, Twelfth Edition gives students a thorough overview of the modern theory of labor market behavior, and reveals how this theory is used to analyze public policy. Designed for students who may not have extensive backgrounds in economics, the text balances theoretical coverage with examples of practical applications that allow students to see concepts in action. Experienced educators for nearly four decades, co-authors Ronald Ehrenberg and Robert Smith believe that showing students the social implications of the concepts discussed in the course will enhance their motivation to learn. As such, the text presents numerous examples of policy decisions that have been affected by the ever-shifting labor market. This text provides a better teaching and learning experience for you and your students. It will help you to: Demonstrate concepts through relevant, contemporary examples: Concepts are brought to life through analysis of hot-button issues such as immigration and return on investment in education. Address the Great Recession of 2008: Coverage of the current economic climate helps students place course material in a relevant context. Help students understand scientific methodology: The text introduces basic methodological techniques and problems, which are essential to understanding the field. Provide tools for review and further study: A series of helpful in-text features highlights important concepts and helps students review what they have learned.

Minimum Wages

Minimum Wages

Author: David Neumark

Publisher: MIT Press

Published: 2008

Total Pages: 389

ISBN-13: 0262141027

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A comprehensive review of evidence on the effect of minimum wages on employment, skills, wage and income distributions, and longer-term labor market outcomes concludes that the minimum wage is not a good policy tool.


Book Synopsis Minimum Wages by : David Neumark

Download or read book Minimum Wages written by David Neumark and published by MIT Press. This book was released on 2008 with total page 389 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive review of evidence on the effect of minimum wages on employment, skills, wage and income distributions, and longer-term labor market outcomes concludes that the minimum wage is not a good policy tool.

Minimum Wages and Employment - Theory and Empirical Evidence with a special emphasis on Germany

Minimum Wages and Employment - Theory and Empirical Evidence with a special emphasis on Germany

Author: Peter Schmidt

Publisher: GRIN Verlag

Published: 2009-02-10

Total Pages: 37

ISBN-13: 3640263618

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Master's Thesis from the year 2008 in the subject Business economics - Economic Policy, grade: 1,0 (A), University of Wisconsin-Milwaukee (Department of Economics), course: Labor Economics II, language: English, abstract: One of the most important issues that was in the center of the political debate in Germany in the last few months is the introduction of minimum wages. It was caused by the politically forced imposition of a minimum wage in the sector for postal services which, in the view of many experts, provides a competitive advantage for the major postal service company “Deutsche Post World Net”1 compared to its competitors. Then it happened that the “PIN – Group AG” one of the most important domestic competitors of the “Deutsche Post World Net” was threatened by insolvency as its largest shareholder the publisher “Axel Springer AG” was no longer willing to invest money in the “PIN - Group AG”. Additionally, many newspapers published by Axel Springer AG wrote articles against the imposition of a minimum wage for many weeks and published many interviews with economic experts warning about the negative effects of a minimum wage on the overall German labor market. Furthermore, political considerations, e.g. by the secretary of labor, to introduce a federal minimum wage in Germany even caused the chairmen of the eight leading economic research institutes in Germany to publish a letter in the newspaper “Das Handelsblatt”2 where they advise politicians against the introduction of a federal minimum wage if (large) employment losses should be avoided. On the other hand, a few other researchers, experts and politicians like the “IAB”3 as a specific labor market research institute believe that minimum wages even could create jobs and must not necessarily destroy them. This paper is motivated by this ongoing debate between economists and policymakers in the whole world. That is why in the first part of the paper the major theoretical framework which is used by economists to analyze and empirically assess the impacts of minimum wages on employment should be presented.


Book Synopsis Minimum Wages and Employment - Theory and Empirical Evidence with a special emphasis on Germany by : Peter Schmidt

Download or read book Minimum Wages and Employment - Theory and Empirical Evidence with a special emphasis on Germany written by Peter Schmidt and published by GRIN Verlag. This book was released on 2009-02-10 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2008 in the subject Business economics - Economic Policy, grade: 1,0 (A), University of Wisconsin-Milwaukee (Department of Economics), course: Labor Economics II, language: English, abstract: One of the most important issues that was in the center of the political debate in Germany in the last few months is the introduction of minimum wages. It was caused by the politically forced imposition of a minimum wage in the sector for postal services which, in the view of many experts, provides a competitive advantage for the major postal service company “Deutsche Post World Net”1 compared to its competitors. Then it happened that the “PIN – Group AG” one of the most important domestic competitors of the “Deutsche Post World Net” was threatened by insolvency as its largest shareholder the publisher “Axel Springer AG” was no longer willing to invest money in the “PIN - Group AG”. Additionally, many newspapers published by Axel Springer AG wrote articles against the imposition of a minimum wage for many weeks and published many interviews with economic experts warning about the negative effects of a minimum wage on the overall German labor market. Furthermore, political considerations, e.g. by the secretary of labor, to introduce a federal minimum wage in Germany even caused the chairmen of the eight leading economic research institutes in Germany to publish a letter in the newspaper “Das Handelsblatt”2 where they advise politicians against the introduction of a federal minimum wage if (large) employment losses should be avoided. On the other hand, a few other researchers, experts and politicians like the “IAB”3 as a specific labor market research institute believe that minimum wages even could create jobs and must not necessarily destroy them. This paper is motivated by this ongoing debate between economists and policymakers in the whole world. That is why in the first part of the paper the major theoretical framework which is used by economists to analyze and empirically assess the impacts of minimum wages on employment should be presented.

Minimum Wages and Firm-level Employment in a Developing Country

Minimum Wages and Firm-level Employment in a Developing Country

Author: Fredrik Sjöholm

Publisher:

Published: 2020

Total Pages:

ISBN-13:

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The effect of minimum wages on employment is a matter of debate, and the existing empirical literature contains mixed results. One reason for this is the methodological difficulties involved where changes in minimum wages are endogenous to other important economic changes. To overcome this problem, we examine exogenous changes to local minimum wages in Indonesia between 1989 and 1994. Our natural experiment results from a national policy change: from minimum wages being determined by local guidelines and criteria to minimum wages being harmonized and set according to nationwide criteria. We examine how these changes in minimum wages affect employment, considering the effect both on employment within plants and on exit of plants. Our results show no evidence of an effect of minimum wages on employment in Indonesian plants. One explanation found in the data is that higher minimum wages force plants to increase productivity, which in turn enables them to retain their labor force, despite higher wage costs.


Book Synopsis Minimum Wages and Firm-level Employment in a Developing Country by : Fredrik Sjöholm

Download or read book Minimum Wages and Firm-level Employment in a Developing Country written by Fredrik Sjöholm and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The effect of minimum wages on employment is a matter of debate, and the existing empirical literature contains mixed results. One reason for this is the methodological difficulties involved where changes in minimum wages are endogenous to other important economic changes. To overcome this problem, we examine exogenous changes to local minimum wages in Indonesia between 1989 and 1994. Our natural experiment results from a national policy change: from minimum wages being determined by local guidelines and criteria to minimum wages being harmonized and set according to nationwide criteria. We examine how these changes in minimum wages affect employment, considering the effect both on employment within plants and on exit of plants. Our results show no evidence of an effect of minimum wages on employment in Indonesian plants. One explanation found in the data is that higher minimum wages force plants to increase productivity, which in turn enables them to retain their labor force, despite higher wage costs.

The Minimum Wage and Labor Market Outcomes

The Minimum Wage and Labor Market Outcomes

Author: Christopher J. Flinn

Publisher: MIT Press

Published: 2011-02-04

Total Pages: 321

ISBN-13: 0262288761

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The introduction of a search and bargaining model to assess the welfare effects of minimum wage changes and to determine an “optimal” minimum wage. In The Minimum Wage and Labor Market Outcomes, Christopher Flinn argues that in assessing the effects of the minimum wage (in the United States and elsewhere), a behavioral framework is invaluable for guiding empirical work and the interpretation of results. Flinn develops a job search and wage bargaining model that is capable of generating labor market outcomes consistent with observed wage and unemployment duration distributions, and also can account for observed changes in employment rates and wages after a minimum wage change. Flinn uses previous studies from the minimum wage literature to demonstrate how his model can be used to rationalize and synthesize the diverse results found in widely varying institutional contexts. He also shows how observed wage distributions from before and after a minimum wage change can be used to determine if the change was welfare-improving. More ambitiously, and perhaps controversially, Flinn proposes the construction and formal estimation of the model using commonly available data; model estimates then enable the researcher to determine directly the welfare effects of observed minimum wage changes. This model can be used to conduct counterfactual policy experiments—even to determine “optimal” minimum wages under a variety of welfare metrics. The development of the model and the econometric theory underlying its estimation are carefully presented so as to enable readers unfamiliar with the econometrics of point process models and dynamic optimization in continuous time to follow the arguments. Although most of the book focuses on the case where only the unemployed search for jobs in a homogeneous labor market environment, later chapters introduce on-the-job search into the model, and explore its implications for minimum wage policy. The book also contains a chapter describing how individual heterogeneity can be introduced into the search, matching, and bargaining framework.


Book Synopsis The Minimum Wage and Labor Market Outcomes by : Christopher J. Flinn

Download or read book The Minimum Wage and Labor Market Outcomes written by Christopher J. Flinn and published by MIT Press. This book was released on 2011-02-04 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: The introduction of a search and bargaining model to assess the welfare effects of minimum wage changes and to determine an “optimal” minimum wage. In The Minimum Wage and Labor Market Outcomes, Christopher Flinn argues that in assessing the effects of the minimum wage (in the United States and elsewhere), a behavioral framework is invaluable for guiding empirical work and the interpretation of results. Flinn develops a job search and wage bargaining model that is capable of generating labor market outcomes consistent with observed wage and unemployment duration distributions, and also can account for observed changes in employment rates and wages after a minimum wage change. Flinn uses previous studies from the minimum wage literature to demonstrate how his model can be used to rationalize and synthesize the diverse results found in widely varying institutional contexts. He also shows how observed wage distributions from before and after a minimum wage change can be used to determine if the change was welfare-improving. More ambitiously, and perhaps controversially, Flinn proposes the construction and formal estimation of the model using commonly available data; model estimates then enable the researcher to determine directly the welfare effects of observed minimum wage changes. This model can be used to conduct counterfactual policy experiments—even to determine “optimal” minimum wages under a variety of welfare metrics. The development of the model and the econometric theory underlying its estimation are carefully presented so as to enable readers unfamiliar with the econometrics of point process models and dynamic optimization in continuous time to follow the arguments. Although most of the book focuses on the case where only the unemployed search for jobs in a homogeneous labor market environment, later chapters introduce on-the-job search into the model, and explore its implications for minimum wage policy. The book also contains a chapter describing how individual heterogeneity can be introduced into the search, matching, and bargaining framework.

The Effects of the Minimum Wage on Employment

The Effects of the Minimum Wage on Employment

Author: Marvin H. Kosters

Publisher: A E I Press

Published: 1996

Total Pages: 144

ISBN-13:

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The Clinton administration has claimed its proposal to increase the minimum wage would not affect employment; other research supports that a higher minimum wage means fewer jobs.


Book Synopsis The Effects of the Minimum Wage on Employment by : Marvin H. Kosters

Download or read book The Effects of the Minimum Wage on Employment written by Marvin H. Kosters and published by A E I Press. This book was released on 1996 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Clinton administration has claimed its proposal to increase the minimum wage would not affect employment; other research supports that a higher minimum wage means fewer jobs.

Minimum Wages and On-the-job Training

Minimum Wages and On-the-job Training

Author: Daron Acemoglu

Publisher:

Published: 1999

Total Pages: 60

ISBN-13:

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Becker's theory of human capital predicts that minimum wages should reduce training investments for affected workers, because they prevent these workers from taking wage cuts necessary to finance training. We show that when the assumption of perfectly competitive labor markets underlying this theory is relaxed, minimum wages can increase training of affected workers, by inducing firms to train their unskilled employees. More generally, a minimum wage increases training for constrained workers, while reducing it for those taking wage cuts to finance their training. We provide new estimates on the impact of the state and federal increases in the minimum wage between 1987 and 1992 of the training of low wage workers. We find no evidence that minimum wages reduce training. These results are consistent with our model, but difficult to reconcile with the standard theory of human capital.


Book Synopsis Minimum Wages and On-the-job Training by : Daron Acemoglu

Download or read book Minimum Wages and On-the-job Training written by Daron Acemoglu and published by . This book was released on 1999 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Becker's theory of human capital predicts that minimum wages should reduce training investments for affected workers, because they prevent these workers from taking wage cuts necessary to finance training. We show that when the assumption of perfectly competitive labor markets underlying this theory is relaxed, minimum wages can increase training of affected workers, by inducing firms to train their unskilled employees. More generally, a minimum wage increases training for constrained workers, while reducing it for those taking wage cuts to finance their training. We provide new estimates on the impact of the state and federal increases in the minimum wage between 1987 and 1992 of the training of low wage workers. We find no evidence that minimum wages reduce training. These results are consistent with our model, but difficult to reconcile with the standard theory of human capital.

Minimum Wages

Minimum Wages

Author: Finis Welch

Publisher: Studies in Government Regulati

Published: 1978

Total Pages: 60

ISBN-13:

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Monograph commenting on trends and economic implications regarding minimum wage labour legislation in the USA - develops a system of indexation relating to minimum wage projections to 1981, contrasts Black-White, men and woman workers as well as young workers in terms of labour force participation, income and unemployment and in light of changes in the level of minimum wages. Bibliography pp. 47 and 48, graphs and statistical tables.


Book Synopsis Minimum Wages by : Finis Welch

Download or read book Minimum Wages written by Finis Welch and published by Studies in Government Regulati. This book was released on 1978 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Monograph commenting on trends and economic implications regarding minimum wage labour legislation in the USA - develops a system of indexation relating to minimum wage projections to 1981, contrasts Black-White, men and woman workers as well as young workers in terms of labour force participation, income and unemployment and in light of changes in the level of minimum wages. Bibliography pp. 47 and 48, graphs and statistical tables.