Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations

By Pedro Portugal, A. Cardoso. Social Science Research Network, 2006

183 citations recorded by the source corpus.

Changes in the legislation in the mid-80s in Portugal provide remarkably good conditions for analysis of the employment effects of mandatory minimum wages, as the minimum wage increased sharply for a very specific group of workers. Relying on a matched employer employee panel data set, we model gross worker flows - accessions and separations - in continuing firms, as well as in new firms and those going out of business, using a count regression model applied to proportions. Employment trends for teenagers, the affected group, are contrasted to those of older workers, before and after the raise in the youth minimum wage. The major effect on teenagers of a rising minimum wage is the reduction of separations from the employer, which compensates for the reduction of accessions to new and continuing firms. In this sense, our results can reconcile some of the previous evidence that has been presented in the empirical literature when analyzing the aggregate impact of the minimum wage on youth employment without decomposing it by type of worker flow.

Subfields: Economics and Econometrics, General Health Professions

View Paper: https://www.semanticscholar.org/paper/d08e3d7cc6e3cf8746350f01d641278267565308

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. T. Lester
2. Arindrajit Dubé
3. M. Reich
4. H. Gerner
5. Mario Bossler
6. David A. Green
7. Pierre Brochu
8. Alan Manning

In General Health Professions

1. Arindrajit Dubé
2. H. Gerner
3. T. Lester
4. M. Reich
5. Mario Bossler
6. Alan Manning

Citations in the corpus

• The Impact of Minimum Wages on Labour Market Transitions (2013, background): “Portugal and Cardoso (2006) use rich worker-firm data to look at separations and hires of teenagers before and after a 1987 increase in the Portuguese minimum wage.”
• Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata (2019, background): “Most of the literature shows that minimum wages reduce turnover: Looking at Portuguese data, Portugal and Cardoso (2006) analyzed the short-run effects of a sharp minimum wage increase and found evidence for reduced hires and reduced separations.”
• Minimum Wage Shocks, Employment Flows, and Labor Market Frictions (2012, background): “[39] Portugal, Pedro and Ana Rute Cardoso 2006.”
• Credible Research Designs for Minimum Wage Studies (2013, unknown): “[44] Portugal, Pedro and Ana Rute Cardoso 2006.”