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Long-term responses to large minimum wage shocks: Subminimum and super-minimum workers in Slovenia

Author

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  • Laporšek, Suzana
  • Orazem, Peter F.
  • Vodopivec, Milan
  • Vodopivec, Matija

Abstract

This study examines long-term effects of a large minimum wage increase in Slovenia, covering the universe of employed and unemployed workers. By distinguishing subminimum and super-minimum workers, we find large, persistent disemployment effects for the subminimum group whose productivity fell below the rising minimum wage, both due to lower probability of remaining employed and of finding a job if non-employed. The shock to firm wage bills caused by the minimum wage creates a substitution toward workers whose marginal revenue products are slightly above the minimum wage, but the most skilled are complements with the subminimum workers in their firm.

Suggested Citation

  • Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2024. "Long-term responses to large minimum wage shocks: Subminimum and super-minimum workers in Slovenia," Economic Systems, Elsevier, vol. 48(4).
    • Handle: RePEc:eee:ecosys:v:48:y:2024:i:4:s0939362524000451
    DOI: 10.1016/j.ecosys.2024.101223
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    More about this item

    Keywords

    minimum wage; employment; subminimum; super-minimum; Slovenia;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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