Minimum Wages and Youth Employment: Evidence from the Finnish Retail Trade Sector

Labor Institute for Economic Research Discussion Paper No. 238

29 Pages Posted: 21 Dec 2007

See all articles by Petri Bockerman

Petri Bockerman

Labour Institute for Economic Research; University of Turku - Turku School of Economics

Roope Uusitalo

Uppsala University - Department of Economics; IFAU - Institute for Labour Market Policy Evaluation; Government of the Republic of Finland - VATT Institute for Economic Research; IZA Institute of Labor Economics

Date Written: December 19, 2007

Abstract

Following an agreement between the trade unions and the employer organisations, Finnish employers could pay less than the existing minimum wage for young workers between 1993 and 1995. We examine the effects of these minimum wage exceptions by comparing the changes in wages and employment of the groups whose minimum wages were reduced with simultaneous changes among slightly older workers for whom the minimum wage regulation was still binding. Our analysis is based on the payroll record data and minimum wage agreements from the retail trade sector over the period 1990-2005. We discover that average wages in the eligible group declined only modestly despite the fact that the excess supply of labour during high unemployment should make it relatively easy to attract workers even with low wages. The minimum wage exceptions had no positive effects on employment.

Keywords: Minimum wages, employment, labour demand

JEL Classification: J31, J51

Suggested Citation

Bockerman, Petri and Uusitalo, Roope, Minimum Wages and Youth Employment: Evidence from the Finnish Retail Trade Sector (December 19, 2007). Labor Institute for Economic Research Discussion Paper No. 238, Available at SSRN: https://ssrn.com/abstract=1077751 or http://dx.doi.org/10.2139/ssrn.1077751

Petri Bockerman

Labour Institute for Economic Research ( email )

FIN-00530 Helsinki
Finland
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HOME PAGE: http://www.petribockerman.fi/

University of Turku - Turku School of Economics ( email )

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Roope Uusitalo (Contact Author)

Uppsala University - Department of Economics ( email )

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Sweden

IFAU - Institute for Labour Market Policy Evaluation

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Government of the Republic of Finland - VATT Institute for Economic Research

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