Does the employment effect of National Minimum Wage vary by non-employment rate?: A regression discontinuity approach

Lei Xu; Yu Zhu

doi:10.1111/manc.12427

Does the employment effect of National Minimum Wage vary by non-employment rate? A regression discontinuity approach

Lei Xu (Lead / Corresponding author)
, Yu Zhu

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

254 Downloads (Pure)

Abstract

We extend the Regression Discontinuity model to evaluate the procyclicality of employment effect of minimum wage and show that previous estimates may be biased due to failure to account for the local non-employment rate. The results suggest that the positive employment effect of increasing minimum wage is strongly procyclical, that is, is more pronounced in areas with low non-employment rates. Under an assumption that employers have no direct impact around the cut-off point, the results suggest that a higher minimum wage increases labour supply of young workers.

Original language	English
Pages (from-to)	18-36
Number of pages	19
Journal	Manchester School
Volume	91
Issue number	1
Early online date	29 Nov 2022
DOIs	https://doi.org/10.1111/manc.12427
Publication status	Published - Jan 2023

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Keywords

minimum wage
macroeconomic fluctuation
regression discontinuity
age dependent
procyclicality

ASJC Scopus subject areas

Economics and Econometrics

Access to Document

10.1111/manc.12427Licence: CC BY

Final Published VersionFinal published version, 766 KBLicence: CC BY

Cite this

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