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

Minimum Wage Increase: What It Means for People with Disabilities

[Excerpt] The federal government has passed legislation that increases the minimum wage, the first increase in the national minimum wage in a decade. In addition, a number of states have recently increased the minimum wage to a rate higher than the federal level. For people with significant disabilities who either earn the minimum wage or close to it, these changes present a wonderful opportunity to increase their income. At the same, there are some issues that people with disabilities may need to consider regarding the changes in minimum wage. The purpose of this fact sheet is to review how minimum wage increases are relevant for people with disabilities and provide guidance on how to deal with the impact of the minimum wage on benefits and other issues

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

Minimum Wage Increase: A Guide For Disability Service Providers

[Excerpt] The federal government has passed legislation that increases the minimum wage, the first increase in the national minimum wage in a decade. In addition, a number of states have recently increased the minimum wage beyond federal requirements. Given that many individuals with significant disabilities earn wages at or near the minimum wage, they are likely to be impacted by these changes. The increased minimum wage is a welcome opportunity for many individuals to increase their income from working. However, questions may arise regarding the increase in minimum wage, and service providers are encouraged to assist and guide the individuals they support to deal with any concerns they may have. There are additional issues that service providers also must consider, particularly if they pay consumers for work. The purpose of this fact sheet is to help guide service providers in this process

Do minimum wages in Latin America and the Caribbean matter ? Evidence from 19 countries

Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understanding of if and how minimum wages affect wage distributions in LAC countries. Although there is no single minimum wage institution in the LAC region, the authors find regional trends. Minimum wages affect the wage distribution in both the formal and, especially, the informal sector, both at the minimum wage and at multiples of the minimum. The minimum does not uniformly benefit low-wage workers: in countries where the minimum wage is relatively low compared to mean wages, the minimum wage affects the more disadvantaged segments of the labor force, namely informal sector workers, women, young and older workers, and the low skilled, but in countries where the minimum wage is relatively high compared to the wage distribution, it primarily affects wages of the high skilled. This indicates that the minimum does not generally lift the wages of all, but instead, it offers a wage into which employers can"lock in"wages that are already near that level. Thus, minimum wage legislation is more far-reaching than originally thought, affecting both the uncovered informal sector and those earning above the minimum. In addition, the relative level of the minimum wage is important for determining whose wages are affected.Labor Markets,Income,Wages, Compensation&Benefits,Corporate Social Responsibility,Child Labor

Did the National Minimum Wage Affect UK Prices?

One potential channel through which the effects of the minimum wage could be directed is that firms who employ minimum wage workers could have passed on any higher labour costs resulting from the minimum wage in the form of higher prices. This study looks at the effects of the minimum wage on the prices of UK goods and services by comparing prices of goods produced by industries in which UK minimum wage workers make up a substantial share of total costs with prices of goods and services that make less use of minimum wage labour. Using sectoral-level price data matched to LFS survey data on the share of minimum wage workers in each sector, it is hard to find much evidence of significant price changes in the months that correspond immediately to the uprating of the NMW. However over the longer term, prices in several minimum wage sectors - notably take-away foods, canteen meals, hotel services and domestic services - do appear to have risen significantly faster than prices of non-minimum wage sectors. These effects were particularly significant in the four years immediately after the introduction of the minimum wage.Minimum wage, prices

Assessing the Economic Impact of Minimum Wage Increases on the Washington Economy: A General Equilibrium Approach

Washington voters passed Initiative Measure No. 688 on November 3, 1998. This bill increased Washington’s minimum wage to $5.70 on January 1, 1999.and to$6.50 on January 1, 2000. The Initiative required that future annual changes in Washington’s minimum wage be indexed to inflation in the BLS Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As of 2005, Washington had the highest minimum wage in the nation at $7.35 per hour. Eleven other states have minimum wages above the Federal minimum wage of$5.15 per hour; however, Oregon is the only other state with an inflation-indexed minimum wage, which was $7.05 per hour in 2004. A computable general equilibrium (CGE) model of the Washington economy was used to examine the economic impact of increases in Washington’s minimum wage. Results from the short-run model indicated that a five percent increase in Washington’s minimum wage would cause a loss of 1909 minimum wage jobs (2.5 percent of baseline minimum wage jobs) but the wage bill for minimum wage workers would increase by$22.61 million (2.38 percent of the baseline minimum wage bill). The loss in the total wage and capital bill for the state economy was $14.04 million. The predicted change in gross state product was roughly 0.007 percent. Tracing the impact of increases in the minimum wage across the size distribution of household income, low income households in Washington experienced an increase in welfare and there was a slight decrease in welfare for high income households.Washington's minimum wage, the Washington CGE model, Two-level CES production functions, elasticity of labor-capital substitution, welfare change

The Minimum Wage, Decent Wages, and Time Sovereignty in the European Union

The minimum wage is a legally mandated relationship between money and time. Traditionally, studies of the minimum wage have focused on the money side of this relationship (e.g. how much do minimum wage workers earn) while ignoring its temporal aspects (e.g. how long someone has to work to receive a particular income). This is a significant oversight because it overlooks the temporal investments that minimum wage workers must make in order to achieve a specific sum of money (e.g. there is a significant temporal difference if a minimum wage worker can achieve an income above a poverty threshold by working part-time, full-time, or more than full-time). To address this oversight, we calculate the number of hours individuals and families earning the minimum wage would have to work in order to achieve the poverty-level income in the 20 European Union countries with national statutory minimum wages. Our findings show two things. One is that there are significant differences between how long minimum wage workers must work in order to achieve these income thresholds. The other is that while in some countries this amount is relatively stable over time, in others it can vary considerably

Tax Evasion, Minimum Wage Non-Compliance and Informality

We study the impact of tax and minimum wage reforms on the incidence of informality. To gauge the incidence of informality, we use measures of the extent of tax evasion, the extent of minimum wage non-compliance, and the size of the informal workforce. Our approach allows us to examine (i) the distinction between determinants of firm-level reported wage distribution and actual wage distribution, (ii) the complementarity of tax and minimum wage enforcement, (iii) the impact that a minimum wage reform has on tax and minimum wage compliance, and (iv) the impact that a tax policy reform has on tax and minimum wage compliance. We conclude with the design of optimal minimum wage and tax policies (even in the complete absence of minimum wage enforcement). We do so based on two objectives derived from popular concerns associated with an unchecked expansion of informality: tax revenue maximization, and poverty alleviation among workers.poverty, flat tax reform, minimum wage reform, tax evasion, informality

Political Variables as Instruments: Are They Good Candidates?

The international literature on minimum wage greatly lacks empirical evidence from developing countries. In Brazil, not only are increases in the minimum wage large and frequent but also the minimum wage has been used as anti-inflation policy in addition to its social role. This paper estimates the effects of the minimum wage on employment using Brazilian data. A number of conceptual and identification questions are discussed as tentative explanation of the non-negative estimates found in the literature, for example: (1) The superiority of "spike" over "fraction affected" and "Kaitz index" as a minimum wage variable; (2) Political variables as excluded exogenous instruments; (3) Decomposition of the minimum wage employment effect into hours worked and number of jobs effects. (4) Informal and public sectors sorting robustness checks. Robust results to various alternative specifications and instrumental variables indicate that an increase in the minimum wage has moderately small adverse effects on employment.minimum wage, wage effect, employment effect, informal sector