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The impact of minimum wage on employment in an economic downturn using data from 17 OECD countries for the period 1985-2008

Author

Listed:
  • Chletsos, Michael
  • Giotis, Georgios P.
Abstract
The impact of minimum wage on employment has been a field of conflicts among economists in labor economics. This divergence of views usually takes the form of conflicting empirical studies. However, in our research we managed to find only one study on the employment effect of minimum wages during economic recessions using cross-country evidence. In this paper we try to investigate this issue using a sample of 17 OECD countries with data for the period 1985-2008. We also try to account for institutional and other policy related differences that might have an impact on employment other than the minimum wage. Our empirical analysis points a positive effect of minimum wage on employment and labor force participation rate for teenagers, young adults and youth, but negative effect for the prime-aged and those who belong in the age group 55-64 years old. Regarding the economic circle, we find that, generally in economic downturns our initial results for all age groups do not change significantly.

Suggested Citation

  • Chletsos, Michael & Giotis, Georgios P., 2015. "The impact of minimum wage on employment in an economic downturn using data from 17 OECD countries for the period 1985-2008," MPRA Paper 61323, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:61323
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    References listed on IDEAS

    as
    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.
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    6. Baker, Michael & Benjamin, Dwayne & Stanger, Shuchita, 1999. "The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 318-350, April.
    7. John T. Addison & Orgul Demet Ozturk, 2012. "Minimum Wages, Labor Market Institutions, and Female Employment: A Cross-Country Analysis," ILR Review, Cornell University, ILR School, vol. 65(4), pages 779-809, October.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Minimum wage; Employment; Economic downturn; Minimum wage systems; Labor market institutions and policies.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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