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Minimum wage regulation in Switzerland: Survey evidence for restaurants in the canton of Neuchâtel

Marius Berger and Bruno Lanz

No 19-01, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: This paper provides a first set of results on the impact of minimum wage regulation in Switzerland. We study the effects of an unexpected Supreme Court ruling mandating the Swiss canton of Neuchâtel to enforce a minimum hourly wage of around CHF 20 previously accepted via popular ballot. Given policy discontinuity at cantonal borders, we design a two-wave survey of restaurants to measure wages, employment, workers characteristics, and prices, and administer it in Neuchâtel as well as in geographically proximate districts of neighboring cantons. Our data covers pre- and post-enforcement outcomes for around 100 restaurants, with information for more than 800 employees distributed over two survey waves. Our data suggest that the proportion of workers paid below minimum wage went down from 19% to 5% after the introduction of the policy. This decline is compensated by a significant increase of the workforce paid just above minimum wage, and our results suggest that restaurants did not use employment as a margin of adjustment. We also find evidence that the policy affected the distribution of hourly wages up to CHF 6 above the minimum wage, with some workers initially paid above minimum wage experiencing a wage increase.

Keywords: Minimum wage regulation; Wage distribution; Workforce composition; Lowwage jobs; Restaurant industry (search for similar items in EconPapers)
JEL-codes: C83 J21 J23 J38 R23 (search for similar items in EconPapers)
Pages: 53 pages.
Date: 2019-03
New Economics Papers: this item is included in nep-eur and nep-lma
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Journal Article: Minimum wage regulation in Switzerland: survey evidence for restaurants in the canton of Neuchâtel (2020) Downloads
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