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Spillover Effects of Minimum Wages in Experimental Wage Negotiations

Author

Listed:
  • Marcus Dittrich
  • Andreas Knabe
  • Kristina Leipold

Abstract

We conduct a laboratory experiment to study spillover effects of minimum wages on wages above the minimum. In a bilateral firm-worker bargaining setting, the participants sit face-to-face and make alternating offers. We find that the introduction of a minimum wage exerts upward pressure on wages even if the minimum wage is too low to be a binding restriction. Furthermore, raising the minimum wage to a binding level increases bargained wages strictly above the new minimum wage level. Our results show that wage negotiations might be an additional channel through which spillover effects of minimum wages might arise. (JEL codes: C91, J30, J38)

Suggested Citation

  • Marcus Dittrich & Andreas Knabe & Kristina Leipold, 2014. "Spillover Effects of Minimum Wages in Experimental Wage Negotiations," CESifo Economic Studies, CESifo, vol. 60(4), pages 780-804.
  • Handle: RePEc:oup:cesifo:v:60:y:2014:i:4:p:780-804.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifu034
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    Citations

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    Cited by:

    1. Mario Bossler & Hans-Dieter Gerner, 2020. "Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1070-1094, October.
    2. Denis Fougere & Erwan Gautier & Sébastien Roux, 2016. "The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France," Sciences Po publications 587, Sciences Po.
    3. Fougère, Denis & Gautier, Erwan & Roux, Sébastien, 2016. "Understanding Wage Floor Setting in Industry-Level Agreements: Evidence from France," IZA Discussion Papers 10290, Institute of Labor Economics (IZA).
    4. Hafner, Lucas & Lochner, Benjamin, 2019. "Do minimum wages improve self-rated health? : Evidence from a natural experiment," IAB Discussion Paper 201917, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Antje Schubert & Michael Weber, 2016. "Der flächendeckende Mindestlohn in Sachsen: Hohe Reichweite, vielfältige Reaktionen derBetriebe," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 23(03), pages 05-11, June.
    6. Dittrich, Marcus & Städter, Silvio, 2015. "Moral hazard and bargaining over incentive contracts," Research in Economics, Elsevier, vol. 69(1), pages 75-85.
    7. Erwan Gautier & Sebastien Roux & Milena Suarez-Castillo, 2019. "Do Minimum Wages Make Wages More Rigid? Evidence from French Micro Data," Working papers 720, Banque de France.
    8. Mario Bossler & Sandra Broszeit, 2017. "Do minimum wages increase job satisfaction? Micro-data evidence from the new German minimum wage," LABOUR, CEIS, vol. 31(4), pages 480-493, December.
    9. Antje Schubert & Johannes Steinbrecher & Marcel Thum & Michael Weber & Antje Fanghänel, 2016. "Auswirkungen des flächendeckenden Mindestlohns auf die gewerbliche Wirtschaft im Freistaat Sachsen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 77.
    10. Fougère, Denis & Gautier, Erwan & Roux, Sébastien, 2018. "Wage floor rigidity in industry-level agreements: Evidence from France," Labour Economics, Elsevier, vol. 55(C), pages 72-97.
    11. Bellmann, Lutz & Bossler, Mario & Dummert, Sandra & Ostmeier, Esther, 2017. "Mindestlohn: Längsschnittstudie für sächsische Betriebe," IAB-Forschungsbericht 201707, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    12. Hafner, Lucas, 2019. "Do minimum wages improve self-rated health? Evidence from a natural experiment," FAU Discussion Papers in Economics 02/2019, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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