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The Impact of the Minimum Wage on Match Stability

Author

Listed:
  • Centeno, Mario

    (Banco de Portugal)

  • Duarte, Claudia

    (Banco de Portugal)

  • Novo, Alvaro A.

    (Banco de Portugal)

Abstract

We explore increases in the nominal minimum wage in a difference-in-differences setting to estimate match survival wage elasticity. The elasticity is negative and larger than one for matches directly affected by minimum wage increases, those with paying below the new minimum wage. The impact of the minimum wage is stronger for young workers and the manufacturing sector, groups with a large and increasing share of low-wage workers. Given the low-wage mobility in the Portuguese labor market and the large share of workers directly affected by the minimum wage increase (reaching almost 18%), these results call for a careful analysis of the set of policies that interfere with low-wage employment.

Suggested Citation

  • Centeno, Mario & Duarte, Claudia & Novo, Alvaro A., 2014. "The Impact of the Minimum Wage on Match Stability," IZA Discussion Papers 8703, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8703
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    References listed on IDEAS

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    5. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
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    Cited by:

    1. Alexandre, F. & Bação, P. & Cerejeira, J. & Costa, H. & Portela, M., 2022. "Minimum wage and financially distressed firms: Another one bites the dust," Labour Economics, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    minimum wage; employment and match elasticities; spillover;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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