Effects of Increasing Minimum Wages on Employment and Hours: Evidence from Sweden’s Retail Sector

31 Pages Posted: 6 Jul 2012

See all articles by Per Skedinger

Per Skedinger

Research Institute of Industrial Economics (IFN); Linnaeus University - School of Business and Economics

Date Written: April 12, 2011

Abstract

This paper examines the effects of collectively agreed increases in real minimum wages on employment transitions and hours among manual workers in the Swedish retail sector over the period 2001–05. The findings indicate that increases in real minimum wages are associated with more separations, whereas hours are less affected because separated workers put in relatively fewer hours before being separated. Among the young, however, both employment and hours are negatively affected. Labour-labour substitution seems to be important, since increases in minimum wages promote employment among workers with higher wages than those directly affected by the increases. The assumptions of the econometric model were tested by imposing fictitious minimum wages on lower-level non-manuals in the same industry, with turnover characteristics similar to manuals but covered by a different collective agreement with non-binding actual minimum wages.

Keywords: Minimum wages, Labour-labour substitution, Employment

JEL Classification: J23, J21, J31

Suggested Citation

Skedinger, Per, Effects of Increasing Minimum Wages on Employment and Hours: Evidence from Sweden’s Retail Sector (April 12, 2011). IFN Working Paper No. 869, 2011, Available at SSRN: https://ssrn.com/abstract=2101657 or http://dx.doi.org/10.2139/ssrn.2101657

Per Skedinger (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/PerS

Linnaeus University - School of Business and Economics ( email )

VÄXJÖ, SE-351 95
Sweden

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