The Impact of a Minimum Wage Increase on Hours Worked: Heterogeneous Effects by Gender and Sector

Paul Redmond and Seamus McGuinness

No 16031, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A minimum wage increase could lead to adverse employment effects for certain sub-groups of minimum wage workers, while leaving others unaffected. This heterogeneity could be overlooked in studies that examine the overall population of minimum wage workers. In this paper, we test for heterogeneous effects of a minimum wage increase on the hours worked of minimum wage employees in Ireland. For all minimum wage workers, we find that a ten percent increase in the minimum wage leads to a one-hour reduction in weekly hours worked, equating to an hours elasticity of approximately -0.3. However, for industry workers and those in the accommodation and food sector, the impact is larger, with an elasticity of -0.8. We also find a negative impact on the hours worked among men on minimum wage, with no significant effect for women. In line with suggestions from the recent literature, our study uses administrative wage data to accurately identify those in receipt of minimum wage, while also studying the dynamic impact on hours worked over multiple time periods using a fully flexible difference-in-differences estimator.

Keywords: heterogeneous effects; flexible difference-in-difference; minimum wages (search for similar items in EconPapers)
JEL-codes: E24 J22 J23 J31 J42 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2023-03
New Economics Papers: this item is included in nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in Economica, 2025, 92, (365), 84-106

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Journal Article: The impact of a minimum wage increase on hours worked: heterogeneous effects by gender and sector (2025)
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