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Effects of Increasing Minimum Wages on Employment and Hours: Evidence from Sweden’s Retail Sector

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Abstract

This paper examines the effects of collectively agreed increases in real minimum wages on employment transitions and hours among manual workers in the Swedish retail sector over the period 2001–05. The findings indicate that increases in real minimum wages are associated with more separations, whereas hours are less affected because separated workers put in relatively fewer hours before being separated. Among the young, however, both employment and hours are negatively affected. Labour-labour substitution seems to be important, since increases in minimum wages promote employment among workers with higher wages than those directly affected by the increases. The assumptions of the econometric model were tested by imposing fictitious minimum wages on lower-level non-manuals in the same industry, with turnover characteristics similar to manuals but covered by a different collective agreement with non-binding actual minimum wages.

Suggested Citation

  • Skedinger, Per, 2011. "Effects of Increasing Minimum Wages on Employment and Hours: Evidence from Sweden’s Retail Sector," Working Paper Series 869, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0869
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    File URL: http://www.ifn.se/wfiles/wp/wp869.pdf
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    1. Petri Böckerman & Roope Uusitalo, 2009. "Minimum Wages and Youth Employment: Evidence from the Finnish Retail Trade Sector," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 388-405, June.
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    Cited by:

    1. Eliasson, Tove & Nordström Skans, Oskar, 2014. "Negotiated wage increases and the labor market outcomes of low-wage workers: evidence from the Swedish public sector," Working Paper Series 2014:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    Keywords

    Minimum wages; Labour-labour substitution; Employment;

    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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