Minimum Wages and Insurance within the Firm

Emircan Yurdagul, Effrosyni Adamopoulou, Francesco Manaresi and Omar Rachedi

No 16823, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Minimum wages alter the allocation of firm-idiosyncratic risk across workers. To establish this result, we focus on Italy, and leverage employer-employee data matched to firm balance sheets and hand-collected wage floors. We find a relatively larger pass-through of firm-specific labor-demand shocks into wages for the workers whose earnings are far from the floors, but who are employed by establishments intensive in minimum-wage workers. We study the welfare implications of this fact using an incomplete-market model. The asymmetric pass-through uncovers a novel channel which tilts the benefits of removing minimum wages toward high-paid employees at the expense of low-wage workers.

Keywords: Firm-specific shocks; Pass-through; Minimum wages; Linked employer-employee data; General equilibrium; Complementarities (search for similar items in EconPapers)
JEL-codes: E24 E25 E64 J31 J38 J52 (search for similar items in EconPapers)
Date: 2021-12
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Related works:
Working Paper: Minimum wages and insurance within the firm (2024)
Working Paper: Minimum Wages and Insurance Within the Firm (2022)
Working Paper: Minimum Wages and Insurance Within the Firm (2022)
Working Paper: Minimum Wages and Insurance within the Firm (2021)
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