Do Minimum Wages Make Wages more Rigid? Evidence from French Micro Data

Les salaires minima rendent-ils les salaires plus rigides? Résultats à partir de salaires individuels en France

Erwan Gautier, Sébastien Roux () and Milena Suarez Castillo
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Milena Suarez Castillo: INSEE - Institut national de la statistique et des études économiques (INSEE), CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: How do minimum wages (MW) shape the aggregate wage dynamics when wage adjustment is lumpy? In this paper, we document new empirical findings on the effects of MW on wage rigidity using quarterly micro wage data matched with sectoral bargained MW. We first estimate a micro empirical model of wage rigidity taking into account minimum wage dynamics. We then use a simulation method to investigate implications of lumpy micro wage adjustment for the aggregate wage dynamics. Our main findings are the following. Both national and sectoral MW have a large effect on the timing and on the size of wage adjustments. At the aggregate level, MW contribute to amplify, by a factor of 1.7, the response of wages to past inflation. Ignoring MW leads to underestimate the speed of aggregate wage adjustment by about a year. The elasticities of wages with respect to past inflation, the national MW and industry-level MW are respectively 0.42, 0.17 and 0.16. Finally, there are significant spillover effects of the NMW on higher wages transiting through industry-level MW.

Keywords: Wage Rigidity; Minimum Wage; Collective Bargaining; rigidité des salaires; salaire minimum; négociation collective (search for similar items in EconPapers)
Date: 2019-11
Note: View the original document on HAL open archive server: https://insee.hal.science/hal-05397604v1
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Working Paper: Do Minimum Wages Make Wages More Rigid? Evidence from French Micro Data (2019)
Working Paper: Do Minimum Wages Make Wages more Rigid? Evidence from French Micro Data (2019)
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