Impact Of Wage Research Articles

The impact of investment, PDRB growth, and minimum wage on regional tax revenue across 34 provinces in Indonesia

The impact of investment, PDRB growth, and minimum wage on regional tax revenue across 34 provinces in Indonesia

Informal Employment, the Tertiary Sector, and the Gross Domestic Product: A Structural Equations Model for the Mexican Economy

In Mexico, approximately 55% of the working population is employed informally, contributing 24.4% to the Gross Domestic Product (GDP) in 2022. This study analyzed the impact of wages, taxes, government spending, and unemployment on the informal economy of Mexico from 1980 to 2022, as well as its relationship with the tertiary sector’s contribution to the GDP. The methodology of the study was structural equation modeling. The findings of this study revealed that an increase in taxes, the unemployment rate, and the minimum wage in Mexico tends to be accompanied by a rise in informal employment. Finally, a unitary change in the latent variable informality affected the growth of the tertiary sector’s contribution to the GDP by 0.37 units.

Distributional Equity in the Employment and Wage Impacts of Energy Transitions

Distributional Equity in the Employment and Wage Impacts of Energy Transitions

Two birds, one stone: minimum wage and child labor

PurposeThis paper investigates the impact of quasi-exogenous and substantial increases in the minimum wage on child labor outcomes in Türkiye. The study aims to provide empirical evidence on how minimum wage policies affect child labor outcomes in a developing country context, with a focus on gender and age differences. It seeks to understand whether minimum wage increases lead to a reduction in child labor and whether the impact is different for various demographic groups.Design/methodology/approachThe research employs a difference-in-differences methodology using data from the 2012 and 2019 Child Labor Force Survey in Türkiye. The treatment group consists of children from households with minimum wage earners, while the control group comprises children from other households. Various labor market outcomes are analyzed, and robustness checks are performed.FindingsOur findings indicate that while the overall effect of minimum wage increases on child labor is statistically insignificant, there are notable heterogeneous impacts across different demographic groups and employment sectors. Specifically, we observe a significant reduction in the employment probability of girls under the age of 15 and unpaid family workers. Additionally, the likelihood of younger children being wage earners decreases, and the minimum wage increase reduces employment in the agriculture and services sectors for certain subgroups. The impact is also more limited for children in single-adult-worker households.Social implicationsThese results underscore the varying effects of minimum wage policies on child labor and highlight the importance of considering demographic and sectoral differences in policy formulation. Policymakers should complement such policies with income-generating programs and targeted education initiatives to address child labor issues more comprehensively and sustainably.Originality/valueThis study fills a critical gap in the limited international literature on the causal effects of minimum wage policies on child labor incidence. One notable exception, Menon and van der Meulen Rodgers (2018) have explored the impact of minimum wage on child labor in India using regional variation, our study uniquely analyzes the effects at the household level in Türkiye. This approach provides valuable insights into how minimum wage changes affect child labor outcomes in a developing economy context with a high prevalence of minimum wage earners. It also contributes to the broader economic understanding of child labor and household income dynamics.

Analysis of The Influence of Population Number and Regional Minimum Wage on Unemployment in Central Kalimantan

This study aims to examine the impact of population and regional minimum wages on unemployment in Central Kalimantan. Understanding the factors influencing unemployment is crucial for policymakers, particularly in regions with unique economic and demographic challenges like Central Kalimantan. The research uses data from the period 2011-2023, applying Multiple Linear Regression Analysis to investigate the relationship between population (X1), regional minimum wages (X2), and unemployment (Y). Classical assumption tests, including normality, multicollinearity, autocorrelation, and heteroscedasticity, were conducted to ensure the validity of the regression model. The findings indicate that neither population nor regional minimum wages significantly affect unemployment in Central Kalimantan. These results suggest that other factors may play a more significant role in determining unemployment in the region, providing a basis for future research to explore additional variables and more complex interactions affecting regional unemployment rates.

Effects of minimum wage policies on executive compensation contracts: An empirical analysis in China

This paper investigates the impact of minimum wage policies on executive pay-for-performance sensitivity (PPS) in the compensation packages of A-share listed firms in China. Using data from 745 counties between 2007 and 2020, we find that minimum wage policies lead to a decrease in PPS. This finding remains robust through instrumental variable approaches, cross-border matching tests, alternative measurements, and other rigorous tests. Moreover, the negative impact of minimum wage on PPS is more pronounced in companies with higher labor dependency, limited ability to pass on labor costs to customers, and lower risk resilience. These results support the hypothesis that rising labor costs due to increased minimum wage, which lead to performance distortion and heightened risk, promote shareholders to reduce PPS to optimize compensation contracts for value maximization.

The Minimum Wage in Greece: A Review of Institutional Features, Developments and Effects Between 1975 and 2023

Abstract This paper takes a historical perspective and assesses the evolution of the institutional features in setting the minimum wage in Greece between 1975 and 2023. It also evaluates developments regarding the minimum wage level, its bite and alignment with productivity. The paper reviews the limited available empirical literature on the association of the minimum wage with labour market outcomes (average wages, employment, inequality). It presents new estimates of the elasticity of average wages to the minimum wage. One of the paper’s key points is that the minimum wage setting mechanism has changed over time as the economic environment has changed. Reviewing the evolution of the minimum wage over time to evaluate whether the minimum wage follows productivity developments and whether the minimum wage bites leads to the second and third takeaways of the paper. The minimum wage follows productivity developments over the longer term but not always in the short term. The bite of the minimum wage is high and appears to be higher when government intervention in setting the minimum wage is stronger. As for the impact of the minimum wage on average wages, the new estimates of the elasticity of the average to the minimum wage the paper provides, use more precisely measured wage rates, which show a high elasticity of average to minimum wages. Finally, the review of the existing literature on the employment effects of the minimum wage shows that, as in other countries, the results are mixed with modest negative or no effects.

Unintended workplace safety consequences of minimum wages

We investigate the unintended impact of minimum wage increases on workplace safety. Using establishment-level data from the United States and a cohort-based stacked difference-in-differences design, we find that large increases in minimum wages have significant adverse effects on workplace safety. Our findings indicate that, on average, a large minimum wage increase results in a 4.6 percent increase in the total case rate. Event study estimates show that this adverse effect persists in the medium run. Furthermore, we find a more salient effect for firms more likely to be financially constrained or subject to a higher labor market rigidity in firing workers. We provide suggestive evidence that small minimum wage increases might reduce injury rates, highlighting the potential heterogeneity in the impact of minimum wage changes. We do not find evidence that capital-labor substitution could be behind the findings.

The impact of minimum wage on automotive companies' performance

This paper aims to verify the relationship between minimum wage growth and the financial indicators of automotive companies. As a hi-tech sector, the automotive industry is usually not expected to be affected by minimum wage policies. The introduction of the minimum wage in Germany and the dynamic development of the minimum wage in Eastern European countries make it possible to assess this relationship. German, Czech, Polish, and Slovak automotive company data was obtained from the Orbis database. Panel regression models were applied to test for dependencies. The paper detects the association between the growth of the minimum wage and the increase in personnel cost, which is next to the associations with several financial indicators at the company level. The identified impact is specific to small and medium-sized companies.

Рост заработной платы как фактор повышения эффективности производства в современной России

The work assesses trends in the efficiency of the economy of modern Russia and assesses the impact of wages and accumulated fixed capital on production efficiency. Production efficiency was assessed by return on assets. Factors of production were assessed by the growth rate of wages, their excess over the growth rate of labor productivity, and the growth rate of accumulated fixed capital. Econometric methods were used. It is shown that the main trend in the development of the Russian economy is a decrease in the profitability of assets and, accordingly, production efficiency. An increase in production efficiency by 40% can be achieved through an increase in wages and by 50% through an increase in accumulated fixed capital. Additionally, increased efficiency can be ensured by the rate of growth in wages exceeding the rate of growth in labor productivity.

Is a single minimum wage policy viable option? Evidence from the impact of minimum wage on youth employment in Malaysia

The present study is aimed to identify an ideal mechanism to reduce negative effect of minimum wage on youth employment generation. Using available data from Department of Statistics, the study runs an annual panel regression at the state level based on fixed effect specification model. The finding demonstrates that the minimum wage has a negative effect on employment, particularly among youth. It implies that there is an excess of labour supply in the market at the current wage rate. As a result, the rate set is higher than equilibrium, signifying firm disadvantages. The negative effect is more prevalent if the single national minimum wage rate policy is applied to all states. Therefore, the national wage policy should be thoroughly examined. Instead, a regional wage rate should be explored as a potential solution for mitigating and preventing negative employment effects.

Can minimum wage increases narrow the gender wage gap? Evidence from China

ABSTRACT Using data from the 2011–2019 China Household Finance Survey (CHFS), this paper examines the effect of minimum wage increases on the gender wage gap. The results show that minimum wage increases can significantly reduce the gender wage gap. We further examine the impact of minimum wages on the gender wage gap across the wage distribution and find that minimum wages are conducive to narrowing the gender wage gap at the bottom and middle parts of the wage distribution, but not conducive to reducing the gender wage gap at the upper part of the wage distribution. We also identity heterogeneous effects of minimum wages on the gender wage gap across age, education level, hukou, and work unit. Finally, we find that minimum wages have a negative effect on low-wage workers’ employment. Therefore, governments need to weigh their role in reducing the gender wage gap against the potential negative employment effects when adjusting the minimum wage standard.

The impact of minimum wage increases on unemployment in the V4 countries: Assessing the recommendations of the European Commission

The European Commission has recently implemented legislative measures to improve worker protection through an adequate minimum wage set by national laws or collective agreements. A recommended benchmark for minimum wage calculation is 60% of the gross median wage or 50% of the mean wage. However, the Kaitz index, a ratio indicator, shows lower values in most EU countries, raising concerns about potential negative impact on the labour market. This study aims to identify the impact of the Kaitz index and several other selected variables on unemployment in the V4 countries. Using multiple linear regression, we concluded that the Kaitz index’s growth does not uniformly impact unemployment in the V4 countries. Specifically, in Slovakia and the Czechia, the Kaitz index growth appeared to increase unemployment, in line with neoclassical economic theory. In contrast, Hungary and Poland did not register significant effects. Gender differences were also noted, with the Kaitz index affecting female unemployment in the Czechia and Hungary, and male unemployment in Slovakia. The research results suggest that increasing the minimum wage in the V4 countries is feasible if its growth rate is higher than that of unemployment benefits and the living minimum, but lower than the average wage growth, and if it is supported by economic growth.

Gender, Selection into Employment and the Wage Impact of Immigration

Gender, Selection into Employment and the Wage Impact of Immigration

Flexibility in jobs and autonomy on saving: Mental accounting of personal pension saving decision in Chinese part-time employees

The progression of the digital economy has led to a rise in the adoption of slash occupations by an expanding demographic, resulting in a more diverse wage structure. A portion of the wage is derived from full-time employment, while the remainder is part-time. This study uses a new China-specific survey dataset to investigate the impact of part-time wages (PTW) and full-time wages (FTW) on "autonomous" personal pension savings. The results are as follows: (1) The marginal impact of part-time wages on personal pension savings is significantly greater than that of full-time wages, which challenges the concept of monetary interchangeability and introduces the notion of mental accounting. (2) The mental account impact arises when part-time compensation is associated with "flexibility" in alignment with the prioritization of "autonomy" in individual pension savings. This result remains valid after statistical analysis and the elimination of alternative hypotheses. (3) There appears to be a threshold effect, as the effect of mental accounts on the relationship between part-time wages and personal pension savings progressively diminishes with increasing savings motivation but abruptly weakens as the proportion of part-time income increases. However, the mental account effect does not diminish with an increase in personal pension saving amount; rather, it amplifies. The mental account effect, according to this paper, signifies the emergence of individualistic consciousness, affords the opportunity for personal pension schemes, and is a crucial transitional step from "procedural" to "substantive" reason.

Wage subsidy in the DRC: A CGE analysis

This paper analyzes the impact of wage subsidies on lower-skilled formal workers in the Democratic Republic of Congo (DRC). It employs a multi-sectoral, empirically-calibrated general equilibrium model to capture the economy-wide transactions between the formal and informal sectors and assess policy simulations in the DRC. The simulations, both in the short and long run, indicate that when the government provides wage subsidies to lower-skilled workers, it significantly improves the real disposable incomes of both formal and informal households. There is a general increase across formal and informal sectors in real household disposable incomes due to the wage subsidy. The results show that subsidy allocation narrows the income gap between high and low-income households, as well as between formal and informal sectors. The findings are insightful for wage policy simulations, as the wage subsidy targeting lower-skilled formal workers increases real GDP from the expenditure side by 1.19% and 3.19% in the short and long run, respectively, from the baseline economy.

Higher official wages reduce petty not grand corruption: Evidence from China

Empirical studies have yielded conflicting findings regarding the impact of official wages on corruption. Based on Efficiency Wage Theory and Public Value Theory, this study posits that one contributing factor to such conflict is the failure to discern between petty and grand corruption. This study expands these theories from two perspectives. Firstly, we contend that increasing official wages leads to decreased petty corruption but not grand corruption. Secondly, we propose that the impact of higher official wages weakens when officials earn more than those employed in the private sector. The two hypotheses are validated on our original Chinese corruption dataset via instrumental variable estimations. This study implies that attempting to reduce grand corruption through increasing official wages would incur significant costs with low returns. However, enhancing public sector wages to match those in the private sector could be a strategy to mitigate petty corruption.

Study on the Spatial Effects of Grain Change on Food Security of Feed from the Perspective of Big Food

Using panel data from 30 provinces in China from 2005 to 2020, this paper uses a spatial double difference model to evaluate the policy impact of the “grain-to-feed” policy on feed grain production in pilot areas and adjacent spatial areas. Research has found that the “grain-to-feed” policy has a significant impact on the feed grain production in pilot areas and can significantly increase the feed grain production in pilot areas by about 2.71 million tons. The “grain-to-feed” policy has strengthened the positive connection between pilot areas and adjacent pilot areas, increased feed grain production, and has a significant spatial spillover effect. Robustness analysis shows that whether using different methods to measure spatial adjacency or using different standards to distribute subsidies, the “grain-to-feed” policy can significantly increase feed grain production, narrow the supply and demand gap of feed grain, and ensure feed grain security. Further analysis shows that the “grain-to-feed” policy can not only ensure the security of feed grain for the current and next periods but also promote the increase in farmers’ income, which is long-term and sustainable. Compared with non-pilot areas, the “grain-to-feed” policy can mitigate the negative impact of wage–price signals on feed grain production in pilot areas. It is recommended that government departments accelerate the transformation of food security concepts, establish a “Big Food Perspective”, gradually promote the pilot of the “grain-to-feed” policy nationwide, increase the subsidy amount of the “grain-to-feed” policy, increase financial support for scientific and technological research and achievement transformation in the field of feed grain, prevent the impact of economic price signal fluctuations on feed grain production, and effectively ensure the security of feed grain in China.

Mengungkap Keterkaitan Aspek Sosial-Ekonomi Dengan Pembangunan Manusia (Studi Pada Enam Wilayah Pembangunan Jawa Barat)

This analysis is intended to reveal and examine the partial impact of population density, poverty, economic growth and minimum wages on the human development index covering a number of districts/cities in West Java Province for the 2016-2020 period which are classified based on Area Development (WP). Panel data design using an econometric approach is used to analyze the relationship between several basic socio-economic aspects that are closest, namely poverty, minimum wages, population density and economic growth. All modeling uses a fixed effect model approach except for the Sukabumi development area which uses a common effect model approach. A number of development areas have similarities in data processing and test results, including the Bandung Cekungan WP and the Sukabumi WP with all test variables being significant. This is different from the Bodebekpunjur WP where the population density is not significant, and the Ciayumajakuning WP where the poverty level is not significant. The last two WPs including Purwasuka and East Priangan have two variables that are not significant, namely poverty and economic growth in the first WP and population density and poverty in the last WP.

MINIMUM WAGE AND RETURNS TO THE LABOUR MARKET ACTIVITY

In recent years, the minimum wage in Poland has been increasing not only nominally but also in real terms. Observing these changes, we identify a research gap regarding the impact of the minimum wage on the intensity of labour market flows. While there is no clear-cut relationship, it is possible that such an impact exists and varies according to the demographic characteristics of the group being analysed. In this article, we examine four so-called risk groups: young people (up to 30 years old), older individuals (50 years and above), women, and people with low levels of education. These groups, being the most vulnerable, are likely to benefit the most from an increase in the minimum wage.