Minimum wage and financially distressed firms: Another one bites the dust

F. Alexandre, Pedro Bação, João Cerejeira (), H. Costa and M. Portela

Labour Economics, 2022, vol. 74, issue C

Abstract: Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.

Keywords: Minimum wages; Financially distressed firms; Productivity; JEL classification J38; L25 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Minimum wage and financially distressed firms: another one bites the dust (2020)
Working Paper: Minimum Wage and Financially Distressed Firms: Another One Bites the Dust (2020)
Working Paper: Minimum wage and financially distressed firms: another one bites the dust (2020)
Working Paper: Minimum wage and financially distressed firms: another one bites the dust (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:74:y:2022:i:c:s0927537121001238

DOI: 10.1016/j.labeco.2021.102088

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