TY - JOUR
T1 - Minimum wage effects across heterogeneous markets
AU - Okudaira, Hiroko
AU - Takizawa, Miho
AU - Yamanouchi, K.
N1 - Funding Information:
The analysis using the Census of Manufacture was conducted following an agreement approved by the Japanese Ministry of Economy, Trade and Industry. The analysis using Basic Survey on Wage Structure was conducted following an agreement approved by the Japanese Ministry of Health, Labour and Welfare. The authors are grateful to our editor, anonymous referees, Richard Blundell, Mahmoud El-Gamal, Eric French, Daiji Kawaguchi, Toru Kitagawa, Kozo Kiyota, Hyejin Ku, Kotaro Tsuru, Attila Lindner, Hiroaki Mori, David Neumark, Masao Ohgaki, Fumio Ohtake, Tatsushi Oka, Martin Weidner, Yasutora Watanabe, Jeff Wooldridge and Conny Wunsch, as well as seminar participants at EALE, AASLE, the Japanese Economic Association meeting, and Keio University for their helpful comments. Yuki Umeoka and Noriko Furuya provided excellent research assistance. Okudaira acknowledges research grants from the Japan Society for the Promotion of Science (Grant-in-aid for Scientific Research #15K03434, JSPS Postdoctoral Fellowship for Research Abroad), Okayama University and Doshisha University. Takizawa acknowledges a research grant from JSPS (Grant-in-aid for Scientific Research #17K03716). The authors acknowledge research grants from Nomura Foundation and Murata Foundation.
Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2019/8
Y1 - 2019/8
N2 - Previous studies have reached little consensus on the employment effect of the minimum wage. This paper argues that local labor markets are heterogeneous, in that the impact of the minimum wage is concentrated in specific markets. In particular, we estimate the extent of surplus between each plant's value of marginal product of labor and wage rate and examine whether the minimum wage impact varies across markets with a differential surplus. Building on the recent policy changes in Japan, we find that the employment effect of an increase in the minimum wage is significant and negative in plants for which the value of marginal product of labor is close to the wage rate and which experienced little surplus pre-reform. The minimum wage increases have little employment effect on plants with a relatively high surplus, even when they have a significant number of minimum wage employees.
AB - Previous studies have reached little consensus on the employment effect of the minimum wage. This paper argues that local labor markets are heterogeneous, in that the impact of the minimum wage is concentrated in specific markets. In particular, we estimate the extent of surplus between each plant's value of marginal product of labor and wage rate and examine whether the minimum wage impact varies across markets with a differential surplus. Building on the recent policy changes in Japan, we find that the employment effect of an increase in the minimum wage is significant and negative in plants for which the value of marginal product of labor is close to the wage rate and which experienced little surplus pre-reform. The minimum wage increases have little employment effect on plants with a relatively high surplus, even when they have a significant number of minimum wage employees.
KW - Minimum wage
KW - Monopsonistic labor market
KW - Production function estimation
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U2 - 10.1016/j.labeco.2019.03.004
DO - 10.1016/j.labeco.2019.03.004
M3 - Article
AN - SCOPUS:85064715160
VL - 59
SP - 110
EP - 122
JO - Labour Economics
JF - Labour Economics
SN - 0927-5371
ER -
