Minimum Wages and Insurance within the Firm

65 Pages Posted: 22 Apr 2024

See all articles by Effrosyni Adamopoulou

Effrosyni Adamopoulou

University of Mannheim and IZA

Francesco Manaresi

Bank of Italy

Omar Rachedi

ESADE Business School

Emircan Yurdagul

Charles III University of Madrid; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: 2024

Abstract

Minimum wages generate an asymmetric pass-through of firm shocks across workers. We establish this result leveraging employer-employee data on Italian metal-manufacturing firms, which face different wage floors that vary within occupations. In response to negative firm productivity shocks, workers close to the wage floors experience higher job separations but no wage loss. However, the wage of high-paid workers decreases, and more so in firms with higher incidence of minimum wages. A neoclassical model with complementarities across workers with different skills rationalizes these findings. Our results uncover a novel channel that tilts the welfare gains of minimum wages toward low-paid workers.

Keywords: Firm productivity shocks, pass-through, employer-employee data, skill complementarities, incomplete-market model

JEL Classification: E24, E25, E64, J31, J38, J52

Suggested Citation

Adamopoulou, Effrosyni and Manaresi, Francesco and Rachedi, Omar and Yurdagul, Emircan, Minimum Wages and Insurance within the Firm ( 2024). ZEW - Centre for European Economic Research Discussion Paper No. 24-021, Available at SSRN: https://ssrn.com/abstract=4802784 or http://dx.doi.org/10.2139/ssrn.4802784

Effrosyni Adamopoulou (Contact Author)

University of Mannheim and IZA ( email )

L7, 3-5
Mannheim
Germany

Francesco Manaresi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Omar Rachedi

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

Emircan Yurdagul

Charles III University of Madrid ( email )

CL. de Madrid 126
Madrid, 28903
Spain

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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