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Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions

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  • Kosali Ilayperuma Simon
  • Robert Kaestner

Abstract

Neoclassical labor market theories imply that employers will react to binding minimum wages by changing the level of employment. A multitude of studies consider this aspect of minimum wages, yet fail to reach a consensus as to its employment effects. While the employment effects of the minimum wage are certainly important, the empirical literature has not adequately explored the possibility that employers may also adjust non-wage components of the job such as fringe benefits, job safety, and access to training opportunities. We study the effect of minimum wage legislation on fringe benefits (employer provision of health insurance, pension coverage, dental insurance, vacation pay, and training/educational benefits) and working conditions (shift work, irregular shifts, and workplace safety) during the period 1979 to 2000 using the National Longitudinal Survey of Youth and the Current Population Survey. We examine effects of state and federal variation in the minimum wages on groups likely to be affected by the minimum wage. These effects are compared to estimates found for groups unlikely to be affected by minimum wages. Our results indicate no discernible effect of the minimum wage on fringe benefit generosity for low-skilled workers. This conclusion is unchanged whether we use only state level variation or federal and state variation in minimum wages.

Suggested Citation

  • Kosali Ilayperuma Simon & Robert Kaestner, 2003. "Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions," NBER Working Papers 9688, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9688
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    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
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    6. Anne Beeson Royalty, 2000. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers 172, Northwestern University/University of Chicago Joint Center for Poverty Research.
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    17. repec:fth:prinin:298 is not listed on IDEAS
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    Cited by:

    1. Tonin, Mirco, 2011. "Minimum wage and tax evasion: Theory and evidence," Journal of Public Economics, Elsevier, vol. 95(11), pages 1635-1651.
    2. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers 0812, College of the Holy Cross, Department of Economics.
    3. Tonin, Mirco, 2007. "Minimum wage and tax evasion: theory," Discussion Paper Series In Economics And Econometrics 0711, Economics Division, School of Social Sciences, University of Southampton.
    4. Aaron Lowen & Paul Sicilian, 2009. "“Family-Friendly” Fringe Benefits and the Gender Wage Gap," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 30(2), pages 101-119, June.
    5. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs 2013-04, Center for Economic and Policy Research (CEPR).
    6. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo Group Munich.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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