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Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland

Author

Listed:
  • McGuinness, Seamus

    () (Economic and Social Research Institute, Dublin)

  • Redmond, Paul

    () (ESRI, Dublin)

Abstract

On the 1st of January 2016 the Irish National Minimum Wage increased from €8.65 to €9.15 per hour, an increase of approximately six percent. We use a difference-in-differences estimator to evaluate whether the change in the minimum wage affected the hours worked and likelihood of job loss of minimum wage workers. The results indicate that the increase in the minimum wage had a negative and statistically significant effect on the hours worked of minimum wage workers, with an average reduction of approximately 0.5 hours per week. The effect on minimum wage workers on temporary contracts was higher at 3 hours per week. We found a corresponding increase in part-time employment of 2 percentage points for all minimum wage workers and 10 percentage points for those on temporary contracts. We find no clear evidence that the increase in the minimum wage led to an in-creased probability of becoming unemployed or inactive in the six-month period following the rate change.

Suggested Citation

  • McGuinness, Seamus & Redmond, Paul, 2018. "Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland," IZA Discussion Papers 11632, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11632
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    References listed on IDEAS

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    Cited by:

    1. McVicar, Duncan & Park, Andrew & McGuinness, Seamus, 2018. "Exploiting the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland," IZA Discussion Papers 11585, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    minimum wage; hours of work; employment; unemployment;

    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
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • 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
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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