Minimum wage and manufacturing labor share: Evidence from North Macedonia

Marjan Petreski () and Jaakko Pehkonen

Papers from arXiv.org

Abstract: The objective of the paper is to understand if the minimum wage plays a role for the labor share of manufacturing workers in North Macedonia. We decompose labor share movements on those along a share-capital curve, shifts of this locus, and deviations from it. We use the capital-output ratio, total factor productivity and prices of inputs to capture these factors, while the minimum wage is introduced as an element that moves the curve off. We estimate a panel of 20 manufacturing branches over the 2012-2019 period with FE, IV and system-GMM estimators. We find that the role of the minimum wage for the labor share is industry-specific. For industrial branches which are labor-intensive and low-pay, it increases workers' labor share, along a complementarity between capital and labor. For capital-intensive branches, it reduces labor share, likely through the job loss channel and along a substitutability between labor and capital. This applies to both branches where foreign investment and heavy industry are nested.

Date: 2023-10
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (1)

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http://arxiv.org/pdf/2310.05117 Latest version (application/pdf)

Related works:
Journal Article: MINIMUM WAGE AND MANUFACTURING LABOR SHARE: EVIDENCE FROM NORTH MACEDONIA (2024)
Working Paper: Minimum wage and manufacturing labor share: Evidence from North Macedonia (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2310.05117

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