Low-wage Workers Are Older and Better Educated than Ever

Relative to any of the most common benchmarks -- the cost of living, the wages of the average worker, or average productivity levels -- the current federal minimum wage of $7.25 per hour is well below its historical value. These usual reference points, however, understate the true erosion in the minimum wage in recent decades because the average low-wage worker today is both older and much better educated than the average low-wage worker was in the past

BUDGET PERSPECTIVES 2021, PAPER 2, May 2020. THE POTENTIAL COSTS AND DISTRIBUTIONAL EFFECT OF COVID-19. MINIMUM WAGE POLICY IN IRELAND

I provide an overview of minimum wage policy in Ireland over the past 20 years, and survey the recent evidence on the economic impacts of a minimum wage. Drawing on this evidence, I analyse the potential implications of the recent Covid19 crisis on minimum wage employment in Ireland. The recent evidence shows that minimum wage increases in Ireland have not led to increased job loss among minimum wage workers, but have resulted in some reductions in hours worked among certain groups. Minimum wage increases have led to reductions in wage inequality and the minimum wage has been shown to be important in keeping wage inequality low during recessions. Recent estimates show that more than half of minimum wage employees in Ireland work in the retail, accommodation and food sectors. These sectors have experienced widespread business closures due to the Covid-19 crisis, suggesting that low-wage employees may be disproportionately impacted by job losses. Those who have lost their job may claim the Pandemic Unemployment Payment (PUP) of €350 per week. Minimum wage employees in retail or accommodation and food work, on average, 23 hours per week. This means that the PUP payment is 50 per cent higher than the gross weekly wage of the average minimum wage employee in these sectors. However, the PUP payment was an emergency short-term (12-week) measure, and it seems likely that it will be amended or tapered in coming weeks to address these types of anomalies

The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica

This paper tests the impact of the Costa Rican minimum wage policy on wage inequality and the level of employment in the formal sector (covered by minimum wage legislation) and the informal (uncovered) sector. We also examine the redistributive effects of the minimum wage, between the covered sector and the uncovered sector. Regression analysis using micro data from the Labour Force Surveys over 17 years reveals three important findings. At the median, a unit increase in the minimum wage relative to the average wage is associated with:http://deepblue.lib.umich.edu/bitstream/2027.42/39864/3/wp479.pd

Wage diversity in the euro area - an overview of labour cost differentials across industries

This Paper provides an overview of the magnitude of sectoral wage differentials in the euro area as a whole. Even when adjusting for structural sectoral features such as the skill structure or the proportion of part-timers, average wage levels in services are substantially lower than in manufacturing. The paper also studies how the euro area wage structure compares with that of the United States and the United Kingdom. It discusses some possible determinants of intersectoral wage differentials in the euro area and their likely implications from a policy perspective. A number of worker characteristics (e.g. age, skills, the proportion of temporary or self-employed) are highly correlated with the structure of wage differentials. At the same time, wage differentials are also highly correlated with sector-specific features such as average firm size or capital intensity. Finally, the paper presents some stylised facts on how the euro area wage structure has evolved since the early 1980s.Intersectoral wage differential; wage determination; euro area.

Minimum wage and youth unemployment in local labor markets in Poland

A revised and updated version of this working paper is published in the journal: ROCZNIKI KOLEGIUM ANALIZ EKONOMICZNYCH, KOLEGIUM ANALIZ EKONOMICZNYCHThe aim of the paper is to analyze the impact of minimum wage on youth unemployment (less than 25 years old) in local (NUTS4) labor markets in Poland. The results show that minimum wage in Poland significantly affects youth unemployment in local labor markets in Poland. The higher is the minimum to average wage ratio on local labor market, the higher is the share of youth unemployed in total unemployment. The fact that youths are the group which is disproportionally affected by minimum wage increases is confirmed by low and/or insignificant value of the parameter by minimum to average wage ratio for other, older groups of workers

Size and The City: Productivity, Match Quality and Wage Inequality

This paper elucidates the impact of city growth on wage and wage inequality using a search-theoretical approach. Firms differ in capital intensity and land intensity of the jobs created. When a worker meets a job via a matching technology, a match-specific productivity level is realized and they sign a job contract when they agree with the bargaining wage. A rise in population density leads to rental increment. As a consequence, a higher expected flow profit is required for the creation of a good job. Rent-sharing ensures an increase of the average wage in the good-job sector. This, in turn, increases the reservation wage of workers in the equilibrium. Although the rental increment does not affect the setup costs in the bad-job sector, higher realized productivity level is required to cover higher reservation wage. Since only job contacts with realized productivity levels exceeding reservation productivity threshold are observed, such increase in the threshold raises also the average wage in the bad-job sector. Hence, the average productivity, the match quality and wage go up in each sector unambiguously, giving rise to urban wage premium. In addition, this paper predicts that urbanization widens residual wage inequality of a city. Existing empirical evidence is presented to support the implications of this model.Urban Wage Premium; Match Quality; Job Match

Wage effects of on-the-job training. A meta-analysis

A meta-analysis is used to study the average wage effects of on-the-job training. This study shows that the average reported wage effect of on-the-job training, corrected for publication bias, is 2.6 per cent per course. The analyses reveal a substantial heterogeneity between training courses, while wage effects reported in studies based on instrumental variables and panel estimators are substantially lower than estimates based on techniques that do not correct for selectivity issues. Appropriate methodology and the quality of the data turn out to be crucial to determine the wage returns.Economics ;

Affording Health Care and Education on the Minimum Wage

The current value of the federal minimum wage -- $7.25 per hour -- is often compared to the cost of living, the average wage in the economy, or the productivity of the average worker. By all of these benchmarks, the current federal minimum is well below its historical levels. But the current minimum wage looks even worse when compared to two kinds of purchases strongly associated with a middle-class standard of living or the ability to move up to the middle class: health insurance and a college degree

Rising Wage Inequality in Germany

The paper investigates the evolution of wages and wage inequality in Germany based on samples from the German Socio-Economic Panel (SOEP) 1984 to 2005. Real gross hourly wages for prime age dependent male workers increased on average by 23 percent between 1984 and 1994 in West Germany and the wage distribution was fairly stable. Between 1994 and 2005 average wages increased by 7 percent in West Germany and 18 percent in East Germany. In this period wage inequality, measured by the ratio of the ninetieth to tenth percentile of the wage distribution, increased from 2.5 to 3.1 in West Germany and from 2.4 to 3.2 in East Germany. In West Germany rising wage inequality occurred mainly in the lower part of the wage distribution, whereas in East Germany wage inequality predominantly increased in the upper part of the wage distribution. In West Germany the group of workers with low tenure experienced higher increases in wage inequality compared to the group of workers with high tenure. --Wage Inequality,Skill Structure,Real Wages,Tenure

Evaluating the Extent and Nature of ‘Envelope Wages’ in the European Union: A Geographical Analysis

To evaluate the spatialities of the illegal wage practice where employers pay their declared employees both an official declared wage and an undeclared ‘envelope’ wage so as to avoid tax liabilities, a 2007 survey conducted in 27 European Union (EU) member states is reported. The finding is that 5% of employees received envelope wages which amount on average to some two-fifths of their wage packet. Revealing how, although heavily concentrated in a small group of East-Central European nations, this wage practice is nonetheless ubiquitous, the paper concludes by discussing how this practice might be tackled