In a model with imperfect competition and multiple equilibria we show how an increase in the minimum wage can lead firms to reduce wages (and employment). We find some empirical support for this in the Card–Krueger minimum wage data.

This paper aims at contributing to the employment e ects of minimum wages in a unionised economy. In a dual labour market model, the rst sector outcome is characterised by bargaining between unions and rms, while in the second sector rms have to pay a statutory minimum wage. The model shows that a minimum wage increase has negative employment effects only if the bargaining outcome is described ...

This paper studies renegotiation in models with on-the-job search, with an application to minimum wages. My formulation nests earlier models in the literature as limit cases when the frequency of renegotiation goes to zero or infinity. The equilibrium wage distribution and the bargaining outcomes are unique. When there is a strong response of turnover to a wage increase, firms accept higher wag...

We review the burgeoning literature on the employment effects of minimum wages – in the United States and in other countries – that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wag...

may accept findings that minimum wage increases do not adversely affect employment, but economists question them. Critics have charged that the studies use poor data or incorrect methodologies. Some economists also argue that no convincing theoretical model predicts that minimum wage increases do not reduce employment. Many of these economists believe that low-wage labor markets are instead cha...

Card and Krueger’s analysis of the impact of the 1992 increase in the NJ state minimum wage on employment in fast-food restaurants in NJ and PA is very well known. In 1996 and 1997, the federal minimum wage was increased from $4.25 to $5.15, thereby increasing the minimum wage by $0.90 in PA but by just $0.10 in NJ. We use CPS data to examine the impacts of this increase on employment of likely...

We take advantage of a natural experiment in the minimum wage setting in Russia to study the employment consequences of large hikes in the minimum wage. In September 2007, the Russian government raised the federal minimum wage from 1100 to 2300 Rubles and simultaneously gave the regions the power to set their own minima above the federal threshold. In studying the effect of this reform, we foll...

In this paper we explore the probability that employees have employer-based health insurance. Health insurance is a fixed cost which when added to cash compensation raises the cost of a low-wage worker more than that of a non-low-wage worker. A worker who has high expected medical expenditures or whose family has such expenditures may raise the cost of health insurance for all workers in the fi...

We examine the impacts of minimum wage on employment using minimum-wage hike induced by introduction indexation local to cost living. The revision Minimum Wage Act in 2007 Japan essentially required government set indexed living, with a five-year moratorium period. subsequently increased areas where living was high relative wage. Allowing for different trends labor-market outcomes across region...