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Political Variables as Instruments for the Minimum Wage

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  • Lemos Sara

    (University of Leicester)

Abstract

A number of recent empirical studies have found no evidence that the minimum wage adversely affects employment. Explanations for such non-negative estimates include new theoretical approaches, empirical identification and data issues. In this paper we examine the robustness of such estimates to concerns about bias arising from the simultaneous determination of employment and the minimum wage. We use a number of novel political variables as instruments to control for this source of endogeneity. We exploit the personal characteristics of the politicians voting on minimum wage bills, their voting behavior and their electoral process. Our main conclusion is that the weak relationship between minimum wages and employment does not appear to be driven by endogeneity.

Suggested Citation

  • Lemos Sara, 2005. "Political Variables as Instruments for the Minimum Wage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-31, December.
    • Handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:16
    DOI: 10.2202/1538-0645.1425
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    Cited by:

    1. Hanna Frings, 2013. "The Employment Effect of Industry-Specific, Collectively Bargained Minimum Wages," German Economic Review, Verein für Socialpolitik, vol. 14(3), pages 258-281, August.
    2. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    3. Fernando Borraz & Nicolás Gonzalez Pampillón, 2011. "Assessing the Distributive Impact of More than Doubling the Minimum Wage: The Case of Uruguay," Documentos de Trabajo (working papers) 1711, Department of Economics - dECON.
    4. Bin Gu & Jaehong Park & Prabhudev Konana, 2012. "Research Note ---The Impact of External Word-of-Mouth Sources on Retailer Sales of High-Involvement Products," Information Systems Research, INFORMS, vol. 23(1), pages 182-196, March.
    5. Christl Michael & Köppl-Turyna Monika & Kucsera Dénes, 2018. "Revisiting the Employment Effects of Minimum Wages in Europe," German Economic Review, De Gruyter, vol. 19(4), pages 426-465, December.
    6. Sara Lemos, 2004. "A Menu of Minimum Wage Variables for Evaluating Wages and Employment Effects: Evidence from Brazil," Discussion Papers in Economics 04/3, Division of Economics, School of Business, University of Leicester.
    7. Hanna Frings, 2012. "The Employment Effect of Industry-Specific, Collectively-Bargained Minimum Wages," Ruhr Economic Papers 0348, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Neumark, David & Munguía Corella, Luis Felipe, 2021. "Do minimum wages reduce employment in developing countries? A survey and exploration of conflicting evidence," World Development, Elsevier, vol. 137(C).
    9. Kate Rybczynski & Anindya Sen, 2018. "Employment Effects Of The Minimum Wage: Panel Data Evidence From Canadian Provinces," Contemporary Economic Policy, Western Economic Association International, vol. 36(1), pages 116-135, January.
    10. Sen, Anindya & Rybczynski, Kathleen & Van De Waal, Corey, 2011. "Teen employment, poverty, and the minimum wage: Evidence from Canada," Labour Economics, Elsevier, vol. 18(1), pages 36-47, January.
    11. Fernando Borraz & Nicolás González-Pampillón, 2017. "Assessing the distributive effects of minimum wage," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1081-1112, November.
    12. Sara Lemos, 2004. "The Effect of the Minimum Wage on Prices in Brazil," Discussion Papers in Economics 04/6, Division of Economics, School of Business, University of Leicester.
    13. Sara lemos, 2004. "The Effects of the Minimum Wage in the Formal and Informal Sectors in Brazil," Discussion Papers in Economics 04/8, Division of Economics, School of Business, University of Leicester.
    14. Sara lemos, 2004. "The Effects of the Minimum Wage on Wages, Employment and Prices," Discussion Papers in Economics 04/10, Division of Economics, School of Business, University of Leicester.
    15. Jellal, Mohamed, 2012. "Maroc salaire minimum emploi et pauvreté [Morocco minimum wage employment and poverty]," MPRA Paper 38491, University Library of Munich, Germany.
    16. Josip Lesica, 2018. "Lobbying For Minimum Wages," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 2027-2057, October.
    17. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," Working Papers 060708, University of California-Irvine, Department of Economics, revised Jan 2007.
    18. Christl, Michael & Köppl Turyna, Monika & Kucsera, Denes, 2015. "Employment effects of minimum wages in Europe revisited," MPRA Paper 65761, University Library of Munich, Germany.

    More about this item

    Keywords

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    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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