Minimum wage and financially distressed firms: another one bites the dust

Fernando Alexandre, Pedro Bação, João Cerejeira (), Hélder Costa and Miguel Portela ()
Additional contact information
Fernando Alexandre: NIPE/Universidade do Minho
Hélder Costa: NIPE/Universidade do Minho

No 154, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.

Keywords: minimum wage; financially distressed firms; productivity (search for similar items in EconPapers)
JEL-codes: E24 J38 L25 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020-07, Revised 2020-07
New Economics Papers: this item is included in nep-eff and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_154.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Minimum wage and financially distressed firms: Another one bites the dust (2022)
Working Paper: Minimum wage and financially distressed firms: another one bites the dust (2020)
Working Paper: Minimum Wage and Financially Distressed Firms: Another One Bites the Dust (2020)
Working Paper: Minimum wage and financially distressed firms: another one bites the dust (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0154

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