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Spatial Implications of Minimum Wages

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  • Thiess Büttner
  • Alexander Ebertz

Abstract

This paper addresses possible consequences of a minimum wage in a spatial context. An empirical analysis utilizing German data shows that a signifcant spatial wage structure exists and that, as a consequence, the share of workers earning wages below a minimum wage will be particularly high in rural counties even if we control for educational and occupational differences. A theoretical analysis discusses the implications for the spatial structure of the economy and shows that while the wages in the countryside will be affected positively, wages will decline in the city, where employment and population rise. Workers in the city will further suffer from an increase in housing costs. This supports concerns that urban poverty might increase as a result of the introduction of a minimum wage.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 66.

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Date of creation: 2009
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Handle: RePEc:ces:ifowps:_66

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Keywords: Minimum Wages; Urban Poverty; Spatial Wage Structure; Mobility; Economies of Agglomeration;

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References

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  1. Büttner, Thiess & Fitzenberger, Bernd, 1998. "Central wage bargaining and local wage flexibility: evidence from the entire wage distribution," ZEW Discussion Papers 98-39, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
  3. Joachim Ragnitz & Marcel Thum, 2007. "The empirical relevance of minimum wages for the low-wage sector," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 8(2), pages 35-37, 07.
  4. Koenig, Marion & Möller, Joachim, 2007. "Mindestlohneffekte des Entsendegesetzes? Eine Mikrodatenanalyse für die deutsche Bauwirtschaft," University of Regensburg Working Papers in Business, Economics and Management Information Systems 426, University of Regensburg, Department of Economics.
  5. William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
  6. Florian Lehmer & Joachim Möller, 2010. "Interrelations between the urban wage premium and firm-size wage differentials: a microdata cohort analysis for Germany," The Annals of Regional Science, Springer, vol. 45(1), pages 31-53, August.
  7. Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
  8. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-42, April.
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Citations

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Cited by:
  1. Thiess Büttner & Alexander Ebertz & Jens Ruhose, 2009. "Der Mindestlohn und die räumliche Lohnstruktur in Deutschland," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 62(05), pages 20-26, 03.
  2. Müller, Kai-Uwe & Steiner, Viktor, 2011. "Beschäftigungswirkungen von Lohnsubventionen und Mindestlöhnen - Zur Reform des Niedriglohnsektors in Deutschland," Discussion Papers 2011/4, Free University Berlin, School of Business & Economics.
  3. Alexander Ebertz, 2009. "The Determinants of Joint Residential and Job Location Choices: A Mixed Logit Approach," Ifo Working Paper Series Ifo Working Paper Nr. 82, Ifo Institute for Economic Research at the University of Munich.
  4. Philipp vom Berge & Hanna Frings & Alfredo R. Paloyo, 2013. "High-Impact Minimum Wages and Heterogeneous Regions," Ruhr Economic Papers 0408, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Möller, Joachim & König, Marion, 2012. "The Effects of Minimum Wages in the German Construction Sector - Reconsidering the Evidence," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62064, Verein für Socialpolitik / German Economic Association.

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