Employment eff ects of minimum wage changes across regions, age groups, and sectors
Employment eff ects of minimum wage changes across regions, age groups, and sectors

Summary/Abstract: Increases in minimum wages in many developed and developing economies in recent years raisethe question of whether and how they impact employment. We analyze the employment effects ofminimum wage increases for different age groups of workers simultaneously. We construct a panelusing three-dimensional cells formed by three age groups, two economic sectors, and 16 regions,separately for each year. We use individual data on employee and employer characteristics fromthe Structure of Earnings Survey and aggregated data from the Local Data Bank in Poland. Theresearch period covers 2006–2020.Our results confi rm the differences in employment elasticity for different groups of workers.We discover latent heterogeneities with regions simultaneously experiencing both negative andpositive employment effects of minimum wage changes for different groups of workers andsectors. Negative employment effects are observed mostly for youths, positive employmenteffects are predominant in the groups of workers aged 50 and over. The employment reaction tochanges in the minimum wage is the result of a combination of regional labor market features.Negative employment effects are more likely in areas with larger proportion of workers in theprivate sector, in industries in which it is more diffi cult to increase the prices of goods or servicesproduced, and where small fi rms are widespread.The results show that previous analyses at the aggregated level might underestimate theemployment effects of the minimum wage. The results also show that the overall minimum wageeffects cannot be easily predicted by policymakers.

• Details
• Contents