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Firm‐level Consequences of Large Minimum‐wage Increases in the Czech and Slovak Republics

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  • Tor Eriksson
  • Mariola Pytlikova

Abstract

. After an initial decline in the level of real minimum‐wage rates, there were series of unusually large increases in their levels — 70 and 50 per cent — during the years 1999–2002 in the Czech and Slovak Republics, respectively. Using information from matched employee–employer data sets, we look at the impact of minimum‐wage hikes on both wages and employment. Our results suggest that there are some, but not substantial, job losses in reaction to minimum‐wage hikes and that the impact on firm wages is rather large, implying that further increases of similar magnitude might very well have negative consequences for employment.

Suggested Citation

  • Tor Eriksson & Mariola Pytlikova, 2004. "Firm‐level Consequences of Large Minimum‐wage Increases in the Czech and Slovak Republics," LABOUR, CEIS, vol. 18(1), pages 75-103, March.
  • Handle: RePEc:bla:labour:v:18:y:2004:i:1:p:75-103
    DOI: 10.1111/j.1121-7081.2004.00259.x
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    Cited by:

    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. José Azar & Emiliano Huet-Vaughn & Ioana Marinescu & Bledi Taska & Till von Wachter, 2019. "Minimum Wage Employment Effects and Labor Market Concentration," NBER Working Papers 26101, National Bureau of Economic Research, Inc.
    3. Piotr Lewandowski & Agnieszka Kaminska, 2015. "The effects of minimum wage on a labour market with high temporary employment," IBS Working Papers 7/2015, Instytut Badan Strukturalnych.
    4. Kamila Fialová & Martina Mysíková, 2009. "The Minimum Wage: Labor Market Consequences in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(3), pages 255-274, August.
    5. Pantea, Smaranda, 2017. "Did minimum wage increases reduce employment? Panel data evidence from Romania," MPRA Paper 79863, University Library of Munich, Germany.
    6. Jakub Grossmann, 2021. "The Effects of Minimum Wage Increases in the Czech Republic," CERGE-EI Working Papers wp679, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Jan J. Rutkowski & Stefano Scarpetta, 2005. "Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 7408, September.
    8. Katalin Bodnár & Ludmila Fadejeva & Stefania Iordache & Liina Malk & Desislava Paskaleva & Jurga Pesliakaitė & Nataša Todorović Jemec & Peter Tóth & Robert Wyszyński, 2018. "How do firms adjust to rises in the minimum wage? Survey evidence from Central and Eastern Europe," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-30, December.
    9. Haroon Bhorat & Tara Caetano & Benjamin Jourdan & Ravi Kanbur & Christopher Rooney & Benjamin Stanwix & Ingrid Woolard, 2016. "Investigating the Feasibility of a National Minimum Wage for South Africa," Working Papers 201601, University of Cape Town, Development Policy Research Unit.
    10. Karolina GORAUS‐TAŃSKA & Piotr LEWANDOWSKI, 2019. "Minimum wage violation in central and eastern Europe," International Labour Review, International Labour Organization, vol. 158(2), pages 297-336, June.
    11. International Monetary Fund, 2016. "Cross-Country Report on Minimum Wages: Selected Issues," IMF Staff Country Reports 2016/151, International Monetary Fund.
    12. Sergey Kapelyuk, 2015. "The effect of minimum wage on poverty," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 389-423, April.
    13. Jakub Grossmann, 2021. "The Effects of Minimum Wage Increases in the Czech Republic," Working Papers 2021/2, Czech National Bank.
    14. Tor Eriksson & Mariola Pytliková & Frédéric Warzynski, 2013. "Increased sorting and wage inequality in the Czech Republic," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(2), pages 357-380, April.
    15. Pantea, Smaranda, 2020. "The effect of minimum wage hikes on employment: Evidence from regional panel data from Romania," Economic Systems, Elsevier, vol. 44(3).

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