Wednesday, March 13, 2019

Danish data on the minimum wage: The hourly wage jumps up by 40pct at the discontinuity of minimum wage rules; employment falls by 33pct and total input of hours decreases by 45pct


Do Lower Minimum Wages for Young Workers Raise Their Employment? Evidence From a Danish Discontinuity. Claus Thustrup Kreiner,  Daniel Reck and  Peer Ebbesen Skov. Review of Economics and Statistics, March 04, 2019. https://doi.org/10.1162/rest_a_00825


Abstract : We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6-1.1.


Danish data on the minimum wage: The hourly wage jumps up by 40pct at the discontinuity of minimum wage rules; employment falls by 33pct and total input of hours decreases by 45pct

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