When and Where do Minimum Wage Hikes Increase Hours? Evidence from Ireland

Kevin Devereux and Zuzanna Studnicka

No 202308, Working Papers from School of Economics, University College Dublin

Abstract: Monopsonists suppress employment and wages so as to avoid matching higher wages to their existing employees. Minimum wage hikes force them to pay their existing employees more, reducing the marginal cost of hiring and increasing both wages and employment. However, once the minimum wage exceeds the marginal product of labour, employment e ects become negative. We nd that the rst two National Minimum Wage (NMW) hikes in Ireland over the course of 2016 to 2019 increased hours worked for minimum wage workers (MWWs) in concentrated local labour markets (LLMs), while the third hike had a null or negative e ect. MWWs in non-concentrated LLMs and non-MWWs were una ected. Higher-income, more productive regions drove hours increases, while other regions showed reductions in hours following NMW hikes.

Keywords: Monopsony; Labor market concentration; Industrial concentration; Local labor markets; Minimum wage (search for similar items in EconPapers)
JEL-codes: J31 J42 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2023-04
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