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Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions

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  • Kosali Ilayperuma Simon
  • Robert Kaestner

Abstract

Neoclassical labor market theories imply that employers will react to binding minimum wages by changing the level of employment. A multitude of studies consider this aspect of minimum wages, yet fail to reach a consensus as to its employment effects. While the employment effects of the minimum wage are certainly important, the empirical literature has not adequately explored the possibility that employers may also adjust non-wage components of the job such as fringe benefits, job safety, and access to training opportunities. We study the effect of minimum wage legislation on fringe benefits (employer provision of health insurance, pension coverage, dental insurance, vacation pay, and training/educational benefits) and working conditions (shift work, irregular shifts, and workplace safety) during the period 1979 to 2000 using the National Longitudinal Survey of Youth and the Current Population Survey. We examine effects of state and federal variation in the minimum wages on groups likely to be affected by the minimum wage. These effects are compared to estimates found for groups unlikely to be affected by minimum wages. Our results indicate no discernible effect of the minimum wage on fringe benefit generosity for low-skilled workers. This conclusion is unchanged whether we use only state level variation or federal and state variation in minimum wages.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9688.

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Date of creation: May 2003
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Publication status: published as Simon, Kosali Llayperuma and Robert Kaestner. "Do Minimum Wages Affect Non-Wage Job Attributes? Evidence On Fringe Benefits," Industrial and Labor Relations Review, 2004, v58(1,Oct), 52-70.
Handle: RePEc:nbr:nberwo:9688

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  1. David Neumark & William Wascher, 1998. "Minimum Wages and Training Revisited," NBER Working Papers 6651, National Bureau of Economic Research, Inc.
  2. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 678, Princeton University, Department of Economics, Industrial Relations Section..
  3. Daron Acemoglu & Jorn-Steffen Pischke, 2002. "Minimum wages and on-the-job training," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 20084, London School of Economics and Political Science, LSE Library.
  4. Abowd, John M & Kramarz, Francis & Margolis, David N, 1999. "Minimum Wages and Employment in France and the United States," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2159, C.E.P.R. Discussion Papers.
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  6. Neumark, D. & Schweitzer, M. & Wascher, W., 1999. "The Effect of Minimum Wages Throughout the Wage Distribution," Papers, London School of Economics - Centre for Labour Economics 9919, London School of Economics - Centre for Labour Economics.
  7. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 772-93, September.
  8. Anne Beeson Royalty, 2001. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 222, Northwestern University/University of Chicago Joint Center for Poverty Research.
  9. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," NBER Working Papers 4058, National Bureau of Economic Research, Inc.
  10. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
  11. Alan Manning, 1994. "How do we Know that Real Wages are Too High?," CEP Discussion Papers dp0195, Centre for Economic Performance, LSE.
  12. Janet Currie & Bruce Fallick, 1993. "The Minimum Wage and the Employment of Youth: Evidence from the NLSY," NBER Working Papers 4348, National Bureau of Economic Research, Inc.
  13. repec:fth:prinin:298 is not listed on IDEAS
  14. Richard V. Burkhauser & Kenneth A. Couch & David C. Wittenburg, 2000. "Who Minimum Wage Increases Bite: An Analysis Using Monthly Data from the SIPP and the CPS," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 16-40, July.
  15. Janet Currie & Aaron S. Yelowitz, 1999. "Health Insurance and Less Skilled Workers," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 63, Northwestern University/University of Chicago Joint Center for Poverty Research.
  16. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(4), pages 1493-1525, November.
  17. Baker, Michael & Benjamin, Dwayne & Stanger, Shuchita, 1999. "The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(2), pages 318-50, April.
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Cited by:
  1. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers, College of the Holy Cross, Department of Economics 0812, College of the Holy Cross, Department of Economics.
  2. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs, Center for Economic and Policy Research (CEPR) 2013-04, Center for Economic and Policy Research (CEPR).
  3. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo Group Munich.

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