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Disentangling the Minimum Wage Puzzle: An Analysis of Job Accessions and Separations from a Longitudinal Matched Employer-Employee Data Set

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  • Cardoso, Ana Rute
  • Portugal, Pedro

Abstract

Changes in legislation in mid-80s Portugal provide remarkable conditions for economic analysis, as the minimum wage increased very sharply for a very specific group of workers. Relying on a matched employer-employee panel dataset, we model gross job flows - accessions and separations - in continuing firms, as well as in new firms and those going out of business, using a Poisson regression model applied to proportions. Worker behavior is as well modeled. Employment trends for teenagers, the affected group, are contrasted against older workers, before and after the rise in the youth minimum wage. The major effect on teenagers of a rising minimum wage is the reduction of separations from the employer, which compensates for the reduction of accessions (to new and continuing firms) and the rising dismissals from firms closing down. Indications that job attachment for low wage youngsters rises following an increase in their minimum wage suggest the relevance of supply side factors overcoming demand forces. In this sense, our results can reconcile some of the previous evidence that has been presented in the empirical literature when analysing the overall impact of the minimum wage on youth employment without looking at its sources.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2844.

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Date of creation: Jun 2001
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Handle: RePEc:cpr:ceprdp:2844

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Keywords: Employment; Minimum Wage;

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References

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Citations

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Cited by:
  1. Ana Rute Cardoso & Priscila Ferreira, 2001. "The dynamics of job creation and destruction for University graduates: why a rising unemployment rate can be misleading," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 10, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  2. Anabela Botelho & Ligia Costa Pinto, 2002. "Hypothetical, real, and predicted real willingness to pay in open-ended surveys: experimental results," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 993-996.
  3. Aslan Zorlu & Joop Hartog, 2005. "The effect of immigration on wages in three european countries," Journal of Population Economics, Springer, Springer, vol. 18(1), pages 113-151, December.
  4. Elvira Lima & Teresa J. Esquerdo, 2003. "The economic costs of alcohol misuse in Portugal," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 24, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  5. Ligia Costa Pinto & Glenn Harrison, 2000. "Multilateral negotiations over climate change policy," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 1, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  6. Joao Cerejeira da Silva, 2002. "Identification of the Portuguese industrial districts," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 17, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  7. Botelho, Anabela & Pinto, Ligia Costa, 2004. "Students' expectations of the economic returns to college education: results of a controlled experiment," Economics of Education Review, Elsevier, Elsevier, vol. 23(6), pages 645-653, December.
  8. Cardoso, Ana Rute & Portugal, Pedro, 2001. "Disentangling the Minimum Wage Puzzle: An Analysis of Job Accessions and Separations from a Longitudinal Matched Employer-Employee Data Set," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2844, C.E.P.R. Discussion Papers.
  9. Anabela Botelho, 2001. "Strategic behavior at trial-The production, reporting, and evaluation of complex evidence," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 14, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  10. Paulo Guimaraes, 2001. "The state of Portuguese research in economics: an anlysis based on publications in international journals," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 15, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  11. Elvira Lima & David K. Whynes, 2003. "Finance and performance of Portuguese hospitals," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 20, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  12. Anabela Botelho & Ligia Costa Pinto & Miguel Portela & Antonio Silva, 2001. "The determinants of success in university entrance," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 13, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.

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