Real Minimum Wage Research Articles

Overall and race-specific associations between state-level minimum wage policy and food insecurity in the United States

BackgroundIn the USA, states can set higher minimum wages than the federal government. We investigated the association between state minimum wages and racial/ethnic inequities in food insecurity.MethodsHousehold-level food insecurity and...

Inflation’s Reduction of the Real Minimum Wage and Unemployment in the USA: 1987 to 2021

<p class="MsoNormal" style="margin-top: 12pt; text-align: justify;"><span lang="EN-US" style="font-family: 'times new roman', times, serif; font-size: 14pt;">Hundreds of articles have been written that include empirical estimates of the dis-employment effects of minimum wages; however, many of these articles find statistically insignificant effects, some find significant negative effects, and a few find significant positive effects. Most of these studies use multivariate analyses which can be criticized for omitting key variables. The omitted variables problem ruins all statistics and estimates. This paper uses reiterative truncated projected least squares (RTPLS), a solution to the omitted variables problem, to estimate the percentage increase in unemployment due to a one percent increase in the real minimum wage using monthly data for the 50 states of the USA from 1987 to 2021. RTPLS produces a separate elasticity for every observation where differences in these estimates are due to omitted variables. We argue that RTPLS solves most of the econometric problems that David Neumark identified in his keynote address at a minimum wage conference in Berlin in 2018. We find that the percentage change in the unemployment rate due to a one percent change in the minimum wage ranges between 1.156 and 3.389, that the elasticities for different states tend to move together over time, and that all these elasticities are statistically significant at a 95 percent confidence level.</span></p>

The Netherlands’ Minimum Wage 1969–2022: Can We Learn from Decline?

Abstract This paper evaluates the evolution of the Dutch minimum wage since its introduction in 1969 and discusses this as an intriguing case suggesting that a deeper, economic analysis of firm and employee behaviours is required for minimum-wage analysis in general. The real level of the minimum wage has fallen tremendously after 1979, all the way back nowadays to the level of the early 1970s, due to the system of uprating and to government interventions. The minimum-wage employment share shows an even stronger decline after 1979, but, surprisingly, the share below the unchanged real minimum wage of 1979 and in bands above this has remained largely unchanged. Intriguingly, firms have continued paying the same. Composition shifts in minimum-wage employment are significant, towards larger enterprise on the demand side and towards part-time employees on the supply side. Nationally and internationally, virtually all available minimum-wage analyses of employment effects focus on rises of the minimum wage and ignore drops. However, OECD data show that declines are surprisingly frequent, making them perfectly normal economic occurrences that firms will account for. I argue that declines deserve examination in their own right, certainly also from a monopsonistic perspective. Plausibly, declines incite different responses from increases, and their analysis will require the examination of heterogeneous behaviour of both firms and employees. Such analysis will reinforce the economics of minimum-wage analysis as advocated by David Neumark and its integration in labour economics as advocated by David Card.

Türkiye’de Asgari ücretin Makroekonomik Belirleyicileri Üzerine Teorik ve Ampirik bir Analiz

This study aims to comprehensively examine the macroeconomic factors influencing the determination of minimum wage in Turkey from both theoretical and empirical perspectives. The analysis includes variables such as real minimum wage, unionization rates, inflation levels, unemployment rates, real economic growth (GDP), and labor productivity. The findings indicate a positive relationship between unionization rates and the minimum wage, with inflation also leading to an increase in the minimum wage. Conversely, higher unemployment rates are found to decrease the minimum wage, while economic growth positively impacts it. Increased labor productivity, however, is associated with a decrease in the minimum wage. Additionally, dummy variables for crisis periods were not statistically significant. These results highlight the importance of considering various macroeconomic factors in the formulation of minimum wage policies. The outcomes of this study provide valuable insights for policymakers and pave the way for future research. Key Words: Minimum wage, Unemployment, CPI, GDP, ARDL Model. JEL Codes: E1, E24, J3.

Could the minimum wage policy reduce food insecurity among households of formal workers in Indonesia?

BackgroundPrevious studies have concluded that minimum wages increase workers' wages. However, whether this effect will continue to improve households' food insecurity is an interesting question, especially in Indonesia, where food insecurity is still a public policy challenge. This study explores the ongoing impact of minimum wages on household food insecurity in Indonesia, leveraging data from the National Socioeconomic Survey (2017–2019) and provincial-level variations in minimum wages. The study employs unconditional quantile regression to provide nuanced insights by analyzing three food insecurity indicators: per capita calorie intake, per capita consumption of vegetables and fruits, and food diversity. We also investigate potential mechanisms driving the link between the minimum wage and food insecurity.ResultsThe study revealed that the real minimum wage reduced food insecurity, especially at specific distribution points. Significantly, the effect on per capita calorie intake was observed in lower deciles. The impact on dietary diversity was observed up to the seventh decile. However, the minimum wage increase did not significantly improve the consumption of nutritious foods like fruits and vegetables, except for the top deciles. The study confirmed that the minimum wage's impact on food insecurity operated through wage increases, particularly in the bottom-to-median wage distribution within the manufacturing sector.ConclusionsThe study concluded that the minimum wage policy ameliorated household food insecurity indicators in specific distribution segments. Our results support the effectiveness of government policies in increasing the minimum wage as a viable approach to mitigating food insecurity among formal worker households, especially within the manufacturing sector. However, additional policies targeting the lower end of the per capita calorie intake distribution are necessary, as the minimum wage was recognized to have no impact on this group.

Impacts of Climate Change in Baja California Winegrape Yield

We analyzed climate change scenarios and their possible impacts on winegrape yield in Baja California, the leading wine producer in Mexico. Linear regression models were used to predict the current yield based on climate and economic variables. Using future projections of the climate variables from two regional climate models (RegCM and RCA4), we evaluated the possible changes in yield for the Near Future (NF: 2021−2040) and Intermediate Future (IF: 2041−2060) periods under low (RCP2.6) and high (RCP8.5) greenhouse gas emissions scenarios. One regression model includes maximum and minimum temperatures (Tx and Tn) of the winegrape growing season and accumulated winter precipitation (Pre), and the other model also includes the real minimum wage and winegrape price to evaluate the operating cost paid by producers. The results show that the linear regression model with the climatic and economic variables explains 28% of the winegrape yield, and Tx and Tn had the greatest influence. The climate change scenarios show that during the winegrape growing season, these variables could increase more than 1 °C in the NF and more than 2 °C in the IF under the RCP8.5 scenario. These latter temperature changes could reduce the yield between 18% and 35% relative to the reference observed climate dataset (Livneh). However, winegrape yield is sensitive to economic factors, as the yield reduction increases at least 3% in all cases. Thus, adaptation strategies need to be implemented in the viticulture sector to reduce future impacts.

Minimum Wages around Birth and Child Health.

This paper studies the effects of minimum wages in Indonesia around the time of birth on child height-for-age Z scores (HAZ) up to five years of age. Using variations in annual fluctuations in real minimum wages in different Indonesian provinces, it finds that children exposed to increases in minimum wages in their birth years have higher HAZ in the first five years of their lives. The estimated impacts are based on difference-in-differences models with biological-mother fixed effects and year-of-birth fixed effects and are robust to inclusion of multiple time-varying factors. The impacts are prominent particularly among male children.

DETERMINAN PENGELUARAN KONSUMSI AKHIR RUMAH TANGGA DI JAWA TIMUR

This study aim to examine the determinants of household final consumption expenditures in East Java. The determinants were investigated using the system generalized method of moments (SYS- GMM) model and applied to data from 38 regencies/cities in East Java from 2011 to 2021. The implementation of SYS-GMM provides valid and consistent estimates. The results of the parameter significance test provide evidence that the lag of real household final consumption expenditure, real gross regional domestic product, government spending, minimum wage, and inflation rate have a significant positive impact. Meanwhile, the open unemployment rate has a significant negative impact. Based on the results of this study, policymakers must always maintain the stability of the determinants of the household's final consumption expenditure.

The Health Wedge and Labor Market Inequality

ABSTRACT: Over half of the US population receives health insurance through an employer with premium contributions creating a flat "head tax" per worker, independent of their earnings. This paper develops and calibrates a stylized model of the labor market to explore how this uniquely American approach to financing health insurance contributes to labor market inequality. We consider a partial-equilibrium counterfactual in which employer-provided health insurance is instead financed by a statutory payroll tax on firms. We find that, under this counterfactual financing, in 2019 the college wage premium would have been 11 percent lower, noncollege annual earnings would have been $1,700 (3 percent) higher, and noncollege employment would have been nearly 500,000 higher. These calibrated labor market effects of switching from head tax to payroll tax financing are in the same ballpark as estimates of the impact of other leading drivers of labor market inequality, including changes in outsourcing, robot adoption, rising trade, unionization, and the real minimum wage. We also consider a separate partial-equilibrium counterfactual in which the current head tax financing is maintained, but 2019 US health care spending as a share of GDP is reduced to the Canadian share; here, we estimate that the 2019 college wage premium would have been 5 percent lower and noncollege annual earnings would have been 5 percent higher. These findings suggest that health care costs and the financing of health insurance warrant greater attention in both public policy and research on US labor market inequality.

Do labour market institutions variables impact unemployment?Evidence from the CEE countries

Purpose: In this study, the aim is to determine whether labour market institutions (LMI) variables im-pacted the unemployment rate in the Central and Eastern Europe (CEE) countries between 2000 and 2017.Methodology: Panel data methods that take cross-sectional dependence into account are used for the analysis. Results: Empirical findings show that real minimum wages, tax wedge, and union density do not impact the unemployment rate in Poland, Latvia, and Estonia, while these variables impact the unemployment rate in Slovakia, the Czech Republic, Slovenia, and Hungary.Conclusion: As a result of the research, it is concluded that the LMI variables do not have a substantial effect on the unemployment rate in Poland, Latvia, and Estonia. On the other hand, the LMI variables have a substantial impact on the unemployment rate in Slovakia, the Czech Republic, Slovenia, and Hungary. Therefore, it is understood that the LMI variables have an influence on the unemployment in only four out of seven CEE countries.

Influence of state policy components on the rate of violence and crime against human life and health

The share of crimes against human life and health on average is up to 10% worldwide, and losses are estimated from 0.3 to 3% of GDP. This study examines the dependence of the rate of violence and crime against human life and health on the state policy elements in the example of transitioning and developing countries. The crime index, the share of people reporting crime, the rate of violence or vandalism in the area, and the number of intentional homicide offenses in the largest cities were used as parameters characterizing the rate of violence and crime against human life and health. All parameters were divided into institutional, social, and economic. The dependence between the indicators was studied using fixed-effects and random-effects models; a grouping of countries according to the nature of this dependence employed the iterative separation method of k-means and tree clustering. Based on the results, it is justified that institutional and economic (highest GDP and real minimum wages) components significantly influence the level of violence and crime against human life and health. For example, the average value of the crime index for the fourth cluster is 29.98 compared to 54.09 for the first cluster. At the same time, strengthening responsibility for committed crimes has a more negligible impact on the crime level than increasing the material well-being of the population and supporting its vulnerable segments.

DETERMINAN PENGELUARAN KONSUMSI AKHIR RUMAH TANGGA DI JAWA TIMUR

This study aim to examine the determinants of household final consumption expenditures in East Java. The determinants were investigated using the system generalized method of moments (SYS-GMM) model and applied to data from 38 regencies/cities in East Java from 2011 to 2021. The implementation of SYS-GMM provides valid and consistent estimates. The results of the parameter significance test provide evidence that the lag of real household final consumption expenditure, real gross regional domestic product, government spending, minimum wage, and inflation rate have a significant positive impact. Meanwhile, the open unemployment rate has a significant negative impact. Based on the results of this study, policymakers must always maintain the stability of the determinants of the household's final consumption expenditure.

Earnings Inequality and the Minimum Wage: Evidence from Brazil

Increases in the minimum wage can substantially reduce earnings inequality. To demonstrate this, we combine administrative and survey data with an equilibrium model of the Brazilian labor market. We find that a 128 percent increase in the real minimum wage in Brazil between 1996 and 2018 had far-reaching spillover effects on wages higher up in the distribution. The increased minimum wage accounts for 45 percent of a large fall in earnings inequality over this period. At the same time, the effects of the minimum wage on employment and output are muted by reallocation of workers toward more productive firms.. (JEL D31, E23, E24, J31, J38, O15)

The Impact of Digital Technologies on Neoclassical Labour Market

Abstract Labour market economics works on the principle of a neoclassical approach. Competitive forces, corporate policy, collective bargaining, and state intervention create the reality of the market. Technological progress in advanced technology, robotics, and artificial intelligence is strengthening the economies of several countries. The article deals with the actual influence of digital technologies on the neoclassical paradigm of the labour market and the impacts on the tasks and requirements for the competencies of workers and the level of their qualifications. Research is based on secondary data from relevant sources with emphasis on the quality using the interface Primo database, enabling the search for data in full-fledged databases (Web of Science, ProQuest, etc.). The real minimum wage, employment rate and jobs at risk of automation were analysed to compare the situation in European countries. The main objective is to analyse the magnitude of the impact of digital technologies on the labour market. The results point to technological progress, especially automation, which eliminates job positions by substituting low-skilled workers with machine learning robots. Government can ensure more balanced inclusive growth in the area of education. The change in the concept of teaching leads to higher qualifications and skills for future employees.

On the Character and Causes of Inequality in Latin America

On the Character and Causes of Inequality in Latin America

Macroeconomic impacts of increasing the minimum wage: The case of Korea

In the late 2010s, the Korean government substantially increased the minimum wage to help low-income workers and stimulate the economy. This study quantifies the long-run effect of increasing the minimum wage on major macroeconomic variables in Korea by using a large-firm search and matching model. Results indicate that increasing the minimum wage reduces employment, primarily among workers with low productivity. However, the average labor productivity for employed workers increases, thereby facilitating firms to increase capital investment. The latter effect is not substantially large to dominate the former effect. The results imply that increasing the real minimum wage by 15%, as in 2018, eventually reduces the total employment and gross output by 3.5% and 1.0%, respectively.

Moderate wage increases and flexible labour contracts to protect employment in Colombian manufacturing

Based on conditional and unconditional demands for labour, we exploit the variations of real minimum wage across manufacturing subsectors to present evidence that this variable affects formal employment. The long-term elasticity of labour demand to the minimum wage is around –0.7. Accordingly, increases in the minimum wage lead to job losses for unskilled labour, mainly in plants with fewer than 100; thus, small increases in the minimum wage are desirable to protect employment. Labour demand is highly cyclical: the output elasticity is about 1.7. Thus, some flexibility in labour contracts is desirable to reduce the link between employment and variation of plants’ sales. Open-ended labour contracts might allow reductions of the nominal wage rather than inducing job losses during periods of severe slumps, as has happened during the COVID-19 pandemic.

Faktor-Faktor yang Memengaruhi Ketimpangan Pendapatan di Indonesia: Suatu Analisis dengan Model Regresi Data Panel

Income distribution is one of the important factors determining the effectiveness of growth in reducing poverty. This study examines the factors determining income distribution in Indonesia. The results of econometric analysis show that income distribution in Indonesia strongly affected by human capital, real per capita income, real minimum wages, and inflation. Human capital, real per capita income and inflation tends to equalizing on income distribution, while real minimum wages tend to have disequalizing effects on income distribution. The results also show that Kuznets U curve hypothesis is empirically confirmed.

Unemployment transitions and the role of minimum wage: From pre-crisis to crisis and recovery

Abstract During the last decade, unemployment in Greece climbed up to 28%, almost quadrupling due to the economic crisis that hit Greece. In the present paper, we examine the determinants of the unemployment dynamics and the impact of the minimum wage on the probability of making a transition into and out of unemployment. We use micro-level data from the Greek Labour Force Survey (LFS) of the period 2004 to 2019 and control for several demographic factors, macro-economic conditions, regional differences, and changes in the statutory minimum wage. The results suggest that individual-level characteristics play an important role in making a transition into or out of unemployment. Changes in the real minimum wage are estimated to have either a statistically insignificant or a very small impact on unemployment entries and exits. Further, the impact of economy's growth rate follows the theoretical predictions as higher growth rates increase unemployment outflows and decrease inflows, while the regional differences are also important. Our findings persist even when we split the sample in three periods (pre-crisis, crisis, recovery). The results have important policy implications. Given that the disemployment effect of the minimum wage seems to be very limited in the Greek labor market, while the socioeconomic characteristics and regional characteristics play an important role, improving the skills of individuals through the educational system and reskilling or up-skilling programs while targeting specific regions may facilitate labor market mobility.

Effect of Minimum Wages on Inflation and Unemployment in East Java - Indonesia

Unemployment and inflation are two macroeconomic problems that have a trade-off, this means that the relationship between inflation and unemployment is negative and the relationship is also called the Phillips curve. The increase in the minimum wage is one of the causes of inflation and unemployment. This study aims to determine the relationship between minimum wage and inflation, the relationship between minimum wage and unemployment, the relationship between inflation and unemployment. This study uses panel data from 38 regions with the period 2010-2019 in East Java-Indonesia. Data is collected from the Central Bureau of Statistics of East Java. Data were analyzed with the Amos. The results showed that the real minimum wage had a negative and significant effect on inflation. Real minimum wages have a positive and significant effect on unemployment. Inflation has a positive and significant effect on unemployment. There is no trade-off between inflation and unemployment, this study does not support the Phillips curve. The real minimum wage has a direct negative effect on inflation, inflation has a positive effect on unemployment, thus causing the real minimum wage to have a negative effect indirectly on unemployment. The relationship between inflation and unemployment shows that higher inflation tends to lead to higher unemployment. The determination coefficient for inflation was 5.5 percent and the determination coefficient for unemployment was 2.3 percent. Keywords: minimum wages, inflation, unemployment, Phillips Curve DOI: 10.7176/JESD/12-8-04 Publication date: April 30 th 2021