Minimum wages and employment retention: A microeconometric study for Estonia

Abstract

This paper assesses the effect of increases in the Estonian minimum wage in 2013-2016 on the probability of workers at different wage levels retaining employment. The effect is identified by comparing the probability of workers remaining employed after increases in the minimum wage in 2013-2016 with the probability of workers at comparable wage levels remaining employed in the 2009-2011 when the minimum wage was left unchanged. Estimations on data from the Estonian Labour Force Survey show that the increases in the minimum wage in 2013-2016 had no or small and imprecisely estimated effects on employment retention for the directly affected workers and similarly for those indirectly affected. These results are robust to the choice of control variables, to refinements of the treatment group and to changes in the time sample.

Unemployment in the Context of Minimum Wage Concept in Slovakia

“…Hinnosar and Rõõm (2003) identified negative impact in the nineties in Estonia. Ferraro, Hänilane, & Staehr (2018), who examined the period from 2013 to 2016 in Estonia, determined no statistically significant impact. Melnyk (1996) examined an impact of the minimum wage increase on employment and unemployment rate during the period 1991 -1995 in Poland.…”

Ambiguous effects of minimum wage tool of labour markets regulation – key study of V4 countries

“…A part of economists believes that this institutional factor prevents effective labour market functioning, however, on the other hand it can lead to the stabilization of the employment. (G. Bertola, T. Boeri and S. Cazes, 1999, S. Cazes and A. Nesporova, 2003, S. Ferraro, B. Hänilane, K. Staehr, 2018, H. Son, 2016. S. Scarpetta (1996) considers the EPL to be a factor which supports young people, long-term unemployed and others who are hard to employ.…”

A First Glance at the Minimum Wage Incidence in Lithuania Using Social Security Data*

“…Despite the volume of empirical work, the evidence is far from conclusive. The results range from studies which find small or null employment effects (Card and Krueger, 1995;Dube et al, 2010Dube et al, , 2016Ferraro et al, 2018;Cengiz et al, 2019;Harasztosi and Lindner, 2019;Dustmann et al, 2019) to those that find negative effects (Neumark and Wascher, 2008;Neumark et al, 2014;Meer and West, 2016;Clemens and Wither, 2019) or that find negative effects only on employment flows, not stocks (Cardoso and Portugal, 2006;Brochu and Green, 2013;Dube et al, 2016). This mixed evidence can be explained by differences in groups of workers analyzed (Dube et al, 2010;Neumark et al, 2014;Clemens and Wither, 2019), time heterogeneity, which biases the research design (Allegretto et al, 2017), the size and temporal dimension of the shock used (Sorkin, 2015;Aaronson et al, 2018), or the fact that labor markets are far from competitive, i.e.…”