Working Paper: CEPR ID: DP2159
Authors: John Abowd; Francis Kramarz; David N. Margolis
Abstract: We use longitudinal individual wage and employment data in France and the United States to investigate the effect of intertemporal changes in an individual's status vis-à-vis the real minimum wage on employment transition rates. We find that movements in both French and American real minimum wages are associated with mild employment effects in general, and very strong effects on workers employed at the minimum wage. In the French case, albeit imprecisely estimated, a 1% increase in the real minimum wage decreases the employment probability of a man (resp. a woman) currently employed at the minimum wage by 1.3% (resp. 1.0%). In the United States, a decrease in the real minimum of 1% increases the probability that a man (resp. a woman) employed at the minimum wage came from nonemployment by 0.4% (resp. 1.6%).
Keywords: minimum wage; international comparisons
JEL Codes: J23; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 1% increase in real minimum wage (J38) | decreases employment probability of men employed at minimum wage (J79) |
| 1% increase in real minimum wage (J38) | decreases employment probability of women employed at minimum wage (J79) |
| 1% decrease in real minimum wage (J38) | increases probability of men transitioning from nonemployment (J68) |
| 1% decrease in real minimum wage (J38) | increases probability of women transitioning from nonemployment (J29) |
| reference-year wage between two real minima (J31) | significantly lower subsequent employment probabilities (J68) |
| conditional elasticities for ages 26-30 in France (J19) | lower subsequent employment probabilities (J68) |
| conditional elasticities for ages 31-35 in France (J19) | lower subsequent employment probabilities (J68) |
| conditional elasticities for ages 26-30 in U.S. (J49) | lower subsequent employment probabilities (J68) |
| conditional elasticities for ages 31-35 in U.S. (J39) | lower subsequent employment probabilities (J68) |