The Impact of the Minimum Wage on Match Stability

28 Pages Posted: 30 Dec 2014

See all articles by Mário Centeno

Mário Centeno

Bank of Portugal - Research Department; Technical University of Lisbon - ISEG (School of Economis and Management); UECE (Research Unit on Complexity and Economics)

Claudia Duarte

Bank of Portugal - Economic Research Department

Álvaro A. Novo

Bank of Portugal; ISEGI, Universidade Nova de Lisboa

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.

Keywords: minimum wage, employment and match elasticities, spillover

JEL Classification: J23, J38

Suggested Citation

Gomes de Freitas Centeno, Mário José and Duarte, Claudia and Novo, Alvaro A., The Impact of the Minimum Wage on Match Stability. IZA Discussion Paper No. 8703, Available at SSRN: https://ssrn.com/abstract=2543897 or http://dx.doi.org/10.2139/ssrn.2543897

Mário José Gomes de Freitas Centeno (Contact Author)

Bank of Portugal - Research Department ( email )

Av. Almirante Reis 71, 6th
Lisbon 1150-012
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351-213130837 (Phone)
351-218132221 (Fax)

Technical University of Lisbon - ISEG (School of Economis and Management)

Rua do Quelhas, 6
Lisboa, 1200-781
Portugal

HOME PAGE: http://www.iseg.utl.pt/docentes/docentes.php?qual=1249

UECE (Research Unit on Complexity and Economics) ( email )

ISEG/UTL, Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Claudia Duarte

Bank of Portugal - Economic Research Department ( email )

R. do Ouro 27
Lisboa, 1100-150
Portugal

HOME PAGE: http://www.bportugal.pt/en-US/EstudosEconomicos/EconomistasInvestigadores/Pages/ClaudiaDuarte.aspx

Alvaro A. Novo

Bank of Portugal ( email )

Rua Francisco Ribeiro, 2
Lisbon, 1150-165
Portugal

ISEGI, Universidade Nova de Lisboa

1099-085 Lisboa, 1099-085
Portugal

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