THE EMPLOYMENT AND WAGE SPILLOVER EFFECTS OF SLOVENIA‟S 2010 MINIMUM WAGE INCREASE

We analyse the effects of a large increase in Slovenia‘s minimum wage in March 2010 using administrative data covering the entire population of labour force participants. We find that the minimum wage increase had a significant and sizable negative effect on the job retention of minimum wage recipients, especially of young and low-education workers, and also led to an increased probability of job-to-job transitions for minimum wage recipients. In addition, we find evidence of spillover effects of the minimum wage increase on wages higher in the wage distribution, with the effects monotonically decreasing with wages but still present at 150 percent of the new minimum wage. The results are based on a difference-in-differences approach in which the treatment group is comprised of workers whose wages at the time of the introduction of the minimum wage raise were below the new minimum wage, and the control group is comprised of workers whose wages were slightly above the new minimum wage

Wage and Productivity Differentials across Privatized, State-Owned and De Novo Firms: Matched Employer-Employee Evidence from Slovenia

How has the transition to a market economy affected the relationship between wages and productivity across different types of workers and firms? This paper examines this question using unusually rich matched employer-employee data from Slovenia over the 1992-2001 period. The findings include strong evidence that 1.) state-owned firms overpaid their employees at the onset of transition, a finding consistent with theoretical predictions on self-managed firms, 2.) older workers have become relatively less productive, indicating a difficulty in acquiring the skills demanded in a market economy, 3.) the relative wages of workers across demographic characteristics such as gender, age and education generally reflect their relative marginal productivity differentials

Making Work Pay in Slovenia

Članak analizira poticaje za prijelaz iz nezaposlenosti u zaposlenost izražene pomoću različitih financijskih pokazatelja u Sloveniji i uspoređuje ih s onima u državama EU. Članak daje pregled glavnih značajki politika isplativosti rada i raspravlja razloge za njihovu primjenu u Sloveniji. Pokazuje se da u Sloveniji obitelji i pojedinci koji ne rade imaju slabe poticaje za pronalaženje posla, jer za mnoge se „posao ne isplati“. Naknade za nezaposlene i novčane naknade, zajedno s visokim poreznim klinom, odvraćaju od rada. Kako bi se riješio ovaj problem, Slovenija bi trebala razmotriti uvođenje dodataka za zapošljavanje, naknada za zaposlene ili oboje. Trenutačno takve politike gotovo ne postoje. U svjetlu međunarodnih uspješnih iskustava s takvim politikama i s obzirom na visoki destimulirajući učinak koji stvaraju zamke nezaposlenosti, neaktivnosti i niskih plaća, takve politike u Sloveniji imaju veliki potencijal za poticanje prijelaza iz nezaposlenosti u zaposlenost i ostanak u radnom odnosu.The paper analyzes incentives for making transition from non-employment to work as expressed by various financial indicators in Slovenia and compares them to the EU countries. It also provides an overview of the main features of making-work-pay policies and discusses reasoning for their implementation in Slovenia. The paper shows that in Slovenia, families and individuals who are not working have poor incentives to find a job – because for many, “it does not pay to work.” Unemployment benefits and cash transfers, coupled with high tax wedge, create high work disincentives. To address this issue, Slovenia should consider introducing into-work benefits, in-work benefits, or both. Presently such policies are virtually non-existent. In the light of international successful experiences with such policies and given the strong work disincentive created by unemployment, inactivity and low-pay traps, in Slovenia such policies have a great potential to stimulate transitions from non-employment to employment and stay in employment

The determination of wages of newly hired employees: survey evidence on internal versus external factors

This paper uses information from a rich firm-level survey on wage and price-setting procedures, in around 15,000 firms in 15 European Union countries, to investigate the relative importance of internal versus external factors in the setting of wages of newly hired workers. The evidence suggests that external labour market conditions are less important than internal pay structures in determining hiring pay, with internal pay structures binding even more often when there is labour market slack. When explaining their choice firms allude to fairness considerations and the need to prevent a potential negative impact on effort. Cross-country differences, that do exist, are found to depend on institutional factors (bargaining structures); countries in which collective agreements are more prevalent and collective agreement coverage is higher report to a greater extent internal pay structures as the main determinant of hiring pay. Within-country differences are found to depend on firm and workforce characteristics; strong association between the use of external factors in hiring pay, on the one hand, and skills (positive) and tenure (negative) on the other.wage rigidity; newly hired workers; internal pay structure; employee turnover; business cycle; survey data

The Determination of Wages of Newly Hired Employees: Survey Evidence on Internal versus External Factors

This paper uses information from a rich firm-level survey on wage and price-setting procedures, in around 15,000 firms in 15 European Union countries, to investigate the relative importance of internal versus external factors in the setting of wages of newly hired workers. The evidence suggests that external labour market conditions are less important than internal pay structures in determining hiring pay, with internal pay structures binding even more often when there is labour market slack. When explaining their choice firms allude to fairness considerations and the need to prevent a potential negative impact on effort. Despite the lower importance of external factors in all countries there is significant cross-country variation in this respect. Cross-country differences are found to depend on institutional factors (bargaining structures); countries in which collective agreements are more prevalent and collective agreement coverage is higher report to a greater extent internal pay structures as the main determinant of hiring pay. Within-country differences are found to depend on firm and workforce characteristics; there is a strong association between the use of external factors in hiring pay, on the one hand, and skills (positive) and tenure (negative) on the other.Wage rigidity, newly hired workers, internal pay structure, employee turnover, business cycle, survey data.

The determination of wages of newly hired employees: survey evidence on internal versus external factors

This paper uses information from a rich firm-level survey on wage and price-setting procedures, in around 15,000 firms in 15 European Union countries, to investigate the relative importance of internal versus external factors in the setting of wages of newly hired workers. The evidence suggests that external labour market conditions are less important than internal pay structures in determining hiring pay, with internal pay structures binding even more often when there is labour market slack. When explaining their choice firms allude to fairness considerations and the need to prevent a potential negative impact on effort. Despite the lower importance of external factors in all countries there is significant cross-country variation in this respect. Cross-country differences are found to depend on institutional factors (bargaining structures); countries in which collective agreements are more prevalent and collective agreement coverage is higher report to a greater extent internal pay structures as the main determinant of hiring pay. Within-country differences are found to depend on firm and workforce characteristics; there is a strong association between the use of external factors in hiring pay, on the one hand, and skills (positive) and tenure (negative) on the other. JEL Classification: J31, J41business cycle, employee turnover, internal pay structure, newly hired workers, survey data, wage rigidity