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Minimum Wage and the Average Wage in France: A Circular Relationship?

Author

Listed:
  • Cette, Gilbert

    (Bank of France)

  • Chouard, Valérie

    (Bank of France)

  • Verdugo, Gregory

    (University of Cergy-Pontoise)

Abstract

This paper investigates whether increases in the minimum wage in France have the same impact on the average wage when intended to preserve the purchasing power of the minimum wage as when intended to raise it. We find that the impact of the minimum wage on the average wage is strong, but differs depending on the indexation factor. We also find some empirical evidence of circularity between the average wage and the minimum wage.

Suggested Citation

  • Cette, Gilbert & Chouard, Valérie & Verdugo, Gregory, 2013. "Minimum Wage and the Average Wage in France: A Circular Relationship?," IZA Discussion Papers 7502, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7502
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    References listed on IDEAS

    as
    1. Gilbert Cette & Etienne Wasmer, 2012. "Les enjeux des changements de règles de revalorisation automatique du SMIC," Working Papers hal-01070395, HAL.
    2. repec:hal:wpspec:info:hdl:2441/10av5r3jd18pmoqdkopa5b5vgl is not listed on IDEAS
    3. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    4. Pierre Blanchard & Patrick Sevestre, 1989. "L'indexation des salaires : quelle rupture en 1982 ?," Économie et Prévision, Programme National Persée, vol. 87(1), pages 67-74.
    5. Philippe Askenazy & Gilbert Cette & Arnaud Sylvain, 2011. "Le partage de la valeur ajoutée," Post-Print halshs-00654669, HAL.
    6. repec:hal:spmain:info:hdl:2441/10av5r3jd18pmoqdkopa5b5vgl is not listed on IDEAS
    7. Stephen Machin & John Van Reenen, 2007. "Changes in Wage Inequality," CEP Reports 18, Centre for Economic Performance, LSE.
    8. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 843-881.
    9. Gilbert Cette & Étienne Wasmer, 2010. "La revalorisation automatique du SMIC," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 139-159.
    10. Pierre Cahuc & Cette Gilbert & André Zylberberg, 2008. "Salaire minimum et bas revenus," Post-Print halshs-00638149, HAL.
    11. Eric Heyer & Hervé Le Bihan & Frédéric Lerais, 2000. "Relation de Phillips, boucle prix-salaire : une estimation par la méthode de Johansen," Économie et Prévision, Programme National Persée, vol. 146(5), pages 43-60.
    12. repec:hal:journl:hal-01070395 is not listed on IDEAS
    13. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    14. Gregory Verdugo & Henri Fraisse & Guillaume Horny, 2012. "Évolution des inégalités salariales en France. Le rôle des effets de composition," Revue économique, Presses de Sciences-Po, vol. 63(6), pages 1081-1112.
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    Cited by:

    1. Verdugo, Gregory, 2014. "The great compression of the French wage structure, 1969–2008," Labour Economics, Elsevier, vol. 28(C), pages 131-144.
    2. Ortega, Javier & Verdugo, Gregory, 2014. "The impact of immigration on the French labor market: Why so different?," Labour Economics, Elsevier, vol. 29(C), pages 14-27.
    3. Arni, Patrick & Eichhorst, Werner & Pestel, Nico & Spermann, Alexander & Zimmermann, Klaus F., 2014. "Kein Mindestlohn ohne unabhängige wissenschaftliche Evaluation," IZA Standpunkte 65, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    average wage; minimum wage; France;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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