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Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland

Seamus McGuinness () and Paul Redmond

No 11632, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: On the 1st of January 2016 the Irish National Minimum Wage increased from €8.65 to €9.15 per hour, an increase of approximately six percent. We use a difference-in-differences estimator to evaluate whether the change in the minimum wage affected the hours worked and likelihood of job loss of minimum wage workers. The results indicate that the increase in the minimum wage had a negative and statistically significant effect on the hours worked of minimum wage workers, with an average reduction of approximately 0.5 hours per week. The effect on minimum wage workers on temporary contracts was higher at 3 hours per week. We found a corresponding increase in part-time employment of 2 percentage points for all minimum wage workers and 10 percentage points for those on temporary contracts. We find no clear evidence that the increase in the minimum wage led to an in-creased probability of becoming unemployed or inactive in the six-month period following the rate change.

Keywords: unemployment; minimum wage; hours of work; employment (search for similar items in EconPapers)
JEL-codes: E24 J22 J23 J31 J42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-law, nep-lma and nep-mac
Date: 2018-06
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