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Minimum Wages and Insurance Within the Firm

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  • Effrosyni Adamopoulou
  • Francesco Manaresi
  • Omar Rachedi
  • Emircan Yurdagul

Abstract

Minimum wages generate an asymmetric pass-through of firm shocks across workers. We establish this result leveraging employer-employee data on Italian metal manufacturing firms, which face different wage floors that vary within occupations. In response to negative firm productivity shocks, workers close to the wage floors experience higher job separations but no wage loss. However, the wage of high-paid workers decreases, and more so in firms with higher incidence of minimum wages. A neoclassical model with complementarities across workers with different skills rationalizes these findings. Our results uncover a novel channel that tilts the welfare gains of minimum wages toward low-paid workers.

Suggested Citation

  • Effrosyni Adamopoulou & Francesco Manaresi & Omar Rachedi & Emircan Yurdagul, 2022. "Minimum Wages and Insurance Within the Firm," CRC TR 224 Discussion Paper Series crctr224_2022_326v3, University of Bonn and University of Mannheim, Germany.
  • Handle: RePEc:bon:boncrc:crctr224_2022_326v3
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    1. Arabzadeh, Hamzeh & Balleer, Almut & Gehrke, Britta & Taskin, Ahmet Ali, 2024. "Minimum wages, wage dispersion and financial constraints in firms," European Economic Review, Elsevier, vol. 163(C).
    2. Luke Haywood, 2023. "Gendered Effects of the Minimum Wage," UB School of Economics Working Papers 2023/450, University of Barcelona School of Economics.
    3. Di Nola, Alessandro & Haywood, Luke & Wang, Haomin, 2023. "Gendered effects of the minimum wage," Working Papers 14, University of Konstanz, Cluster of Excellence "The Politics of Inequality. Perceptions, Participation and Policies".

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    More about this item

    Keywords

    Firm productivity shocks; pass-through; employer-employee data; skill complementarities; incomplete-market model.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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