The purpose of this paper is to examine the effects of collectively agreed increases in minimum wages for manual workers on employment transitions and hours.
The econometric approach relies on the identification of workers affected by minimum wage changes, depending on their position in the wage distribution and contrasts outcomes for these workers to those for unaffected workers, with slightly higher wages.
The analysis suggests that separations increase as minimum wages increase and that substitution between worker groups in response to changes in minimum wages is important in retail. In general, though, hours do not change much as minimum wages increase.
Analyses that deal with employment consequences of increasing minimum wages but disregard hours may exaggerate the overall decline in employment to the extent that job losses are concentrated among low-paid, part-time workers.
With union-bargained minimum wages, unions and employers need to carefully consider the effects of increasing rates on employment.
The findings that there is a trade-off between higher wages among the low-paid and employment loss and that employment to some extent is reshuffled between individuals should be important from a welfare perspective.
The literature on employment effects of minimum wages is large, but very few studies are concerned with union-bargained minimum wages. The assumptions of the econometric model are tested in a novel way by imposing fictitious minimum wages on lower-level non-manuals in the same industry, with turnover characteristics similar to those of manuals but covered by a different collective agreement with non-binding actual minimum wages.
The author wishes to thank two anonymous referees, Petri Böckerman, Daniel Halvarsson, Dan Johansson, Peter Skogman Thoursie and seminar participants at IFN, IFAU, HUI, Ratio, Linnaeus University, Sweden and Xiamen University, China, for helpful comments, Ari Hietasalo and Björn Lindgren at the Swedish Confederation of Enterprise for kindly providing the data, and the Jan Wallander and Tom Hedelius Foundation for generous financial support.
Skedinger, P. (2015), "Employment effects of union-bargained minimum wages: Evidence from Sweden’s retail sector ", International Journal of Manpower, Vol. 36 No. 5, pp. 694-710. https://doi.org/10.1108/IJM-02-2013-0037Download as .RIS
Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited