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Sharp Teeth or Empty Mouths? Revisiting the Minimum Wage Bite with Sectoral Data

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  • Andrea Garnero
  • Stephan Kampelmann
  • François Rycx

Abstract

The paper explores the link between different institutional features of minimum wage systems and the minimum wage bite. We notably address the striking absence of studies on sectoral-level minima and exploit unique data covering 17 European countries and information from more than 1100 collective bargaining agreements. Results provide evidence for a neglected trade-off: systems with bargained sectoral-level minima are associated with higher Kaitz indices than systems with statutory floors, but also with more individuals actually paid below prevailing minima. Higher collective bargaining coverage can to some extent reduce this trade-off between sharp teeth (high wage floors) and empty mouths (noncompliance/noncoverage).

Suggested Citation

  • Andrea Garnero & Stephan Kampelmann & François Rycx, 2013. "Sharp Teeth or Empty Mouths? Revisiting the Minimum Wage Bite with Sectoral Data," Working Papers CEB 13-016, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/143124
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    References listed on IDEAS

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    1. Charles Brown & Curtis Gilroy & Andrew Kohen, 1982. "The Effect of the Minimum Wage on Employment and Unemployment: A Survey," NBER Working Papers 0846, National Bureau of Economic Research, Inc.
    2. Machin, Stephen & Manning, Alan, 1997. "Minimum wages and economic outcomes in Europe," European Economic Review, Elsevier, vol. 41(3-5), pages 733-742, April.
    3. François Rycx & Stephan Kampelmann, 2013. "Who Earns Minimum Wages in Europe? New Evidence Based on Household Surveys," DULBEA Working Papers 13-01, ULB -- Universite Libre de Bruxelles.
    4. repec:hal:journl:halshs-00353896 is not listed on IDEAS
    5. Neumark, David & Salas, J.M. Ian & Wascher, William, 2013. "Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?," IZA Discussion Papers 7166, Institute for the Study of Labor (IZA).
    6. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
    7. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, May.
    8. Boeri, Tito, 2012. "Setting the minimum wage," Labour Economics, Elsevier, vol. 19(3), pages 281-290.
    9. Juan Dolado & Francis Kramarz & Steven Machin & Alan Manning & David Margolis & Coen Teulings, 1996. "The Economic Impact of Minimum Wages in Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353896, HAL.
    10. François Rycx & Andrea Garnero & Stephan Kampelmann, 2013. "Minimum Wages in Europe :Does the Diversity of Systems Lead to a Diversity of Outcomes," ULB Institutional Repository 2013/245797, ULB -- Universite Libre de Bruxelles.
    11. Lothar Funk & Hagen Lesch, 2006. "Minimum Wage Regulations in Selected European Countries," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 41(2), pages 78-92, March.
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    Cited by:

    1. Michael R. Strain & Peter Brummund, 2016. "Real and permanent minimum wages," AEI Economics Working Papers 875967, American Enterprise Institute.
    2. Stijn Broecke & Glenda Quintini & Marieke Vandeweyer, 2018. "Wage Inequality and Cognitive Skills: Re-Opening the Debate," NBER Chapters,in: Education, Skills, and Technical Change: Implications for Future US GDP Growth National Bureau of Economic Research, Inc.
    3. 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.
    4. Piotr Lewandowski & Agnieszka Kaminska, 2015. "The effects of minimum wage on a labour market with high temporary employment," IBS Working Papers 7/2015, Instytut Badan Strukturalnych.

    More about this item

    Keywords

    Minimum wage systems Europe; Collective bargaining; Wage bite; Sectoral data; Europe;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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