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The Effect of Minimum Wage Increases on Wages, Hours Worked and Job Loss

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  • James Bishop

    (Reserve Bank of Australia)

Abstract

Australia has a detailed system of 'awards' that specifiy different minimum wages depending on the industry, location and skill of an employee. Using job-level data from a survey of firms, this paper examines the effect of award wage changes on wages, hours worked and the job destruction rate. I exploit the fact that between 1998 and 2008, award wages were increased by a flat dollar amount each year (say, 50 cents per hour), irrespective of existing award wage levels. This led to larger award wage rises in percentage terms for jobs whose award wages were relatively low, compared to those on higher award wages. I find that adjustments to awards are almost fully passed on to wages in award-reliant jobs. I find no evidence that these small, incremental increases in award wages have an adverse effect on hours worked or the job destruction rate.

Suggested Citation

  • James Bishop, 2018. "The Effect of Minimum Wage Increases on Wages, Hours Worked and Job Loss," RBA Research Discussion Papers rdp2018-06, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp2018-06
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    minimum wage; employment;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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