Who Pays for the Minimum Wage?

By Peter Harasztosi, A. Lindner. The American Economic Review, 2019

343 citations recorded by the source corpus.

This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the reform; that around 75 percent of the minimum wage increase was paid by consumers and 25 percent by firm owners; that firms responded to the minimum wage by substituting labor with capital; and that disemployment effects were greater in industries where passing the wage costs to consumers is more difficult. We estimate a model with monopolistic competition to explain these findings. (JEL J23, J24, J31, J38, L13)

Subfields: Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/a02825ee7b45e3b25c4cf80efbbf385dd2491adf

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Citations in the corpus

Reallocation Effects of the Minimum Wage (2021, methodology): “…1995; Neumark and Wascher 2010), by exploiting a first-time introduction of a minimum wage that cuts deep into the wage distribution and that was persistent as the minimum wage has been increased twice above the inflation rate after its introduction (similarly to Harasztosi and Lindner 2019).”
Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata (2019, background): “These direct elasticities are typically much smaller in the very same setting simply because a change of the minimum wage does not necessarily result in an equivalent one-to-one change in wages (Harasztosi and Lindner 2019).”