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Spatial Implications of Minimum Wages

Author

Listed:
  • Buettner Thiess

    ()

  • Ebertz Alexander

    () (Ifo Institute for Economic Research, Poschingerstr. 5, 81679 Munich, Germany)

Abstract

This paper addresses possible consequences of a minimum wage in a spatial context. An empirical analysis utilizing German data shows that a significant 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.

Suggested Citation

  • Buettner Thiess & Ebertz Alexander, 2009. "Spatial Implications of Minimum Wages," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 292-312, April.
  • Handle: RePEc:jns:jbstat:v:229:y:2009:i:2-3:p:292-312
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    References listed on IDEAS

    as
    1. Beise, Marian & Stahl, Harald, 1999. "Public research and industrial innovations in Germany," Research Policy, Elsevier, vol. 28(4), pages 397-422, April.
    2. Joachim Ragnitz & Marcel Thum, 2007. "The empirical relevance of minimum wages for the low-wage sector," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(2), pages 35-37, July.
    3. 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.
    4. 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.
    5. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    6. 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, pages 1397-1420.
    7. 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;Western Regional Science Association, pages 31-53.
    8. 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, pages 1362-1396.
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    Citations

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    Cited by:

    1. Möller, Joachim & Bender, Stefan & König, Marion & vom Berge, Philipp & Umkehrer, Matthias & Wolter, Stefanie & Schaffner, Sandra & Bachmann, Ronald & Kröger, Hanna & Janßen-Timmen, Ronald & Paloyo, A, 2011. "Evaluation bestehender gesetzlicher Mindestlohnregelungen: Branche: Bauhauptgewerbe. Forschungsauftrag des Bundesministeriums für Arbeit und Soziales (BMAS). Endbericht," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 72591.
    2. 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.
    3. vom Berge, Philipp & Frings, Hanna & Paloyo, Alfredo R., 2013. "High-Impact Minimum Wages and Heterogeneous Regions," Ruhr Economic Papers 408, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Alexander Ebertz, 2009. "The Determinants of Joint Residential and Job Location Choices: A Mixed Logit Approach," ifo Working Paper Series 82, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. Thiess Büttner & Alexander Ebertz & Jens Ruhose, 2009. "Der Mindestlohn und die räumliche Lohnstruktur in Deutschland," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(05), pages 20-26, March.
    6. 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.
    7. 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.
    8. Falck, Oliver & Lameli, Alfred & Ruhose, Jens, 2015. "Cultural Biases in Migration: Estimating Non-Monetary Migration Costs," IZA Discussion Papers 8922, Institute for the Study of Labor (IZA).
    9. repec:zbw:rwirep:0408 is not listed on IDEAS

    More about this item

    Keywords

    Minimum wages; urban poverty; spatial wage structure; mobility; economies of agglomeration;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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