Estimating the employment effects of a minimum wage from a cross-sectional wage distribution. A semi-parametric approach
On the basis of a structural labor demand model employment effects of a minimum wage are estimated from a single cross-sectional wage distribution. The main contribution of the paper is to relax restrictive functional form assumptions of earlier papers by introducing more flexible semi-parametric censored quantile regressions to this framework. We apply the model to the sectoral minimum wage in the German construction sector. It can be shown that the semi-parametric estimates are within a plausible range: employment levels would be 4-5% higher without the minimum wage in the East where the minimum was binding. The effect for West Germany is markedly smaller, since the minimum wage level was lower in relation to the wage distribution. This semi-parametrically estimated structural approach can be a useful alternative to more popular panel data or difference-in-difference models when the necessary institutional variation or data base is either not available, or the necessary assumptions are problematic.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.socialpolitik.org/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Koenig, Marion & Möller, Joachim, 2007. "Mindestlohneffekte des Entsendegesetzes? Eine Mikrodatenanalyse für die deutsche Bauwirtschaft," University of Regensburg Working Papers in Business, Economics and Management Information Systems 426, University of Regensburg, Department of Economics.
- Khan, Shakeeb & Powell, James L., 2001. "Two-step estimation of semiparametric censored regression models," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 73-110, July.
- Thomas K. Bauer & Jochen Kluve & Sandra Schaffner & Christoph M. Schmidt, 2009.
"Fiscal Effects of Minimum Wages: An Analysis for Germany,"
German Economic Review,
Verein für Socialpolitik, vol. 10, pages 224-242, 05.
- Bauer, Thomas K. & Kluve, Jochen & Schaffner, Sandra & Schmidt, Christoph M., 2008. "Fiscal Effects of Minimum Wages: An Analysis for Germany," IZA Discussion Papers 3875, Institute for the Study of Labor (IZA).
- Bauer, Thomas K. & Kluve, Jochen & Schaffner, Sandra & Schmidt, Christoph M., 2008. "Fiscal Effects of Minimum Wages – An Analysis for Germany," Ruhr Economic Papers 79, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
- Andreas Knabe & Ronnie Schöb, 2009.
"Minimum Wage Incidence: The Case for Germany,"
FinanzArchiv: Public Finance Analysis,
Mohr Siebeck, Tübingen, vol. 65(4), pages 403-441, December.
- Dean Jolliffe & Bohdan Krushelnytskyy & Anastassia Semykina, 2001. "Censored least absolute deviations estimator: CLAD," Stata Technical Bulletin, StataCorp LP, vol. 10(58).
- Arindrajit Dube & T. William Lester & Michael Reich, 2010.
"Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties,"
The Review of Economics and Statistics,
MIT Press, vol. 92(4), pages 945-964, November.
- Dube, Andrajit & Lester, T. William & Reich, Michael, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," Institute for Research on Labor and Employment, Working Paper Series qt86w5m90m, Institute of Industrial Relations, UC Berkeley.
- David Neumark & William Wascher, 2006.
"Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research,"
NBER Working Papers
12663, National Bureau of Economic Research, Inc.
- David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," Working Papers 060708, University of California-Irvine, Department of Economics, revised Jan 2007.
- Joachim Ragnitz & Marcel Thum, 2007.
"Zur Einführung von Mindestlöhnen: empirische Relevanz des Niedriglohnsektors,"
ifo Dresden berichtet,
Ifo Institute for Economic Research at the University of Munich, vol. 14(03), pages 36-39, 06.
- Marcel Thum & Joachim Ragnitz, 2007. "Zur Einführung von Mindestlöhnen: Empirische Relevanz des Niedriglohnsektors," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 60(10), pages 33-35, 05.
- Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
- Kenneth Y. Chay & James L. Powell, 2001. "Semiparametric Censored Regression Models," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 29-42, Fall.
- James L. Medoff & Katharine G. Abraham, 1981. "The Role of Seniority at U.S. Work Places: A Report on Some New Evidence," NBER Working Papers 0618, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc12:62019. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.