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Minimum wage regulation in Switzerland: survey evidence for restaurants in the canton of Neuchâtel

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  • Marius Berger

    (État de Neuchâtel)

  • Bruno Lanz

    (University of Neuchâtel
    ETH Zürich
    Massachusetts Institute of Technology)

Abstract

This paper provides a first set of results on the impact of minimum wage regulation in Switzerland. We study the effects of an unexpected Supreme Court ruling mandating the Swiss canton of Neuchâtel to enforce a minimum hourly wage of around CHF 20 previously accepted via popular ballot. Given policy discontinuity at cantonal borders, we design a two-wave survey of restaurants to measure wages, employment, workers’ characteristics, and prices and administer it in Neuchâtel as well as in geographically proximate districts of neighboring cantons. Our data covers pre- and post-enforcement outcomes for around 100 restaurants, with information for more than 800 employees distributed over two-survey waves. Our data suggest that the proportion of workers paid below minimum wage went down from 19% to 5% after the introduction of the policy. This decline is compensated by a significant increase of the workforce paid just above minimum wage, and our results suggest that restaurants did not use employment as a margin of adjustment. We also find evidence that the policy affected the distribution of hourly wages up to CHF 6 above the minimum wage, with some workers initially paid above minimum wage experiencing a wage increase.

Suggested Citation

  • Marius Berger & Bruno Lanz, 2020. "Minimum wage regulation in Switzerland: survey evidence for restaurants in the canton of Neuchâtel," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 156(1), pages 1-23, December.
  • Handle: RePEc:spr:sjecst:v:156:y:2020:i:1:d:10.1186_s41937-020-00067-5
    DOI: 10.1186/s41937-020-00067-5
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    More about this item

    Keywords

    Minimum wage regulation; Wage distribution; Workforce composition; Low-wage jobs; Restaurant industry;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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