DP2159 Minimum Wages and Employment in France and the United States

Author(s): John M Abowd, Francis Kramarz, David N Margolis
Publication Date: May 1999
Keyword(s): International Comparisons, Minimum Wage
JEL(s): J23, J31
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2159

We use longitudinal individual wage and employment data in France and the United States to investigate the effect of intertemporal changes in an individual's status vis-à-vis the real minimum wage on employment transition rates. We find that movements in both French and American real minimum wages are associated with mild employment effects in general, and very strong effects on workers employed at the minimum wage. In the French case, albeit imprecisely estimated, a 1% increase in the real minimum wage decreases the employment probability of a man (resp. a woman) currently employed at the minimum wage by 1.3% (resp. 1.0%). In the United States, a decrease in the real minimum of 1% increases the probability that a man (resp. a woman) employed at the minimum wage came from nonemployment by 0.4% (resp. 1.6%).