Abolishing the Martial Wage Premium in Greece: Employment and Participation Effects on Minimum Wage Workers

Abstract

We estimate the employment and labour force participation effects resulting from the abolition of the marital allowance - a 10 percent mandatory top-up in the Minimum Wage (MW) for married individuals - in Greece in November 2012. Using data from the Greek LFS over the period 2008:Q1-2016:Q1 we do not find any differential change in the probability of employment for individuals depending on their marital status for the whole sample. However, excluding individuals for whom the MW may not be of relevance (individuals between 50 to 64 years of age and individuals with second stage tertiary education), we find that married individuals are 1.26 percentage points more likely to be employed after the reform (relative to singles). Moreover, we find that the probability of labour force participation after the reform is 1.42 percentage points higher for married individuals – a result driven by higher participation rates of married females after the beginning of the crisis, which is evidence in favour of the added worker effect.

Keywords: minimum wage, marital allowance, employment, labour force participation