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.

Minimum Wages and Social Policy
Minimum Wages and Social Policy

Author: Wendy V. Cunningham

Publisher: World Bank Publications

Published: 2007

Total Pages: 154

ISBN-13: 082137012X

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Offering evidence from both detailed individual country studies and homogenized statistics across the Latin American and Caribbean region, this book examines the impact of the minimum wage on wages, employment, poverty, income distribution and government budgets in the context of a large informal sector and predominantly unskilled workforces.

The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence
The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence

Author: Mr.Christopher S Adam

Publisher: International Monetary Fund

Published: 2020-01-31

Total Pages: 77

ISBN-13: 1513527886

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We show that a dynamic general equilibrium model with efficiency wages and endogenous capital accumulation in both the formal and (non-agricultural) informal sectors can explain the full range of confounding stylized facts associated with minimum wage laws in less developed countries.

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: 1484379659

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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.

What Does the Minimum Wage Do?
What Does the Minimum Wage Do?

Author: Dale Belman

Publisher: W.E. Upjohn Institute

Published: 2014-07-07

Total Pages: 489

ISBN-13: 0880994568

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Belman and Wolfson perform a meta-analysis on scores of published studies on the effects of the minimum wage to determine its impacts on employment, wages, poverty, and more.

Cross-Country Report on Minimum Wages
Cross-Country Report on Minimum Wages

Author: International Monetary Fund. European Dept.

Publisher: International Monetary Fund

Published: 2016-06-15

Total Pages: 45

ISBN-13: 147552837X

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This paper provides a cross-country report on minimum wages. In the past few years, many countries in Central Eastern and Southeastern Europe (CESEE) have increasingly turned to minimum wage policies. Throughout the region, statutory minimum wages had been in place at least since the early 1990s, but they were typically set at relatively moderate levels and affected relatively few workers. Minimum wages have risen sharply relative to both average wages and labor productivity. Minimum wages often affect relatively more workers in CESEE than in Western Europe. Governments are the key players in the minimum wage determination in CESEE countries.

Minimum Wages in Developing Countries
Minimum Wages in Developing Countries

Author: Tony Fang

Publisher:

Published: 2022

Total Pages:

ISBN-13:

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There is considerable debate on the level and effects of minimum wages for many decades. However, most of the studies are conducted in developed countries. This chapter first reviews the theoretical frameworks of anticipated effects of a minimum wage increase on wages and employment in developing countries. The empirical challenges are then discussed, including potential heterogeneity, simultaneity (or endogeneity) between employment and minimum wages, and possible omitted variable bias, taking into consideration of the different labour market structures and labour market institutions in developing countries, particularly the level of informal sector, extent of binding minimum wages, level of enforcement, and the vulnerability of the workers impacted. Evidence from BRICS members (Brazil, Russia, India, China, and South Africa) are reviewed and discussed. Surprisingly, there is substantial evidence of positive wage effects in both formal and informal sectors, although the adverse effects on employment are generally modest in the formal sector, and almost non-existent in the informal sector. However, when minimum wages are binding and enforced, studies focusing on vulnerable workers do find significant and positive wage effects and strong disemployment effects, implying that the classic trade-off of minimum wages between higher wages and lower employment does occur in developing countries.

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

Total Pages: 78

ISBN-13: 3640263723

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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, 42 entries in the bibliography, 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 frame