Effects of minimum wage on workers’ on-the-job effort and labor market outcomes

Zhao, Naibao; Meng, Sun

doi:10.1016/j.econmod.2020.03.012

Cited by 8 publications

(9 citation statements)

References 22 publications

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“…When controlling for industrial sectors the models are found to have better estimates, due to the significance of the F-statistics as shown in Tables 2 and 3 This study finds that wages significantly and positively influence labour productivity and TFP, as revealed in Tables 2 and 3 The positive impact of wages on labour productivity and TFP strongly confirms the efficiency wage theory, which suggests that increasing wage levels can motivate workers to boost firm productivity (Akerlof and Yellen, 1990;Shapiro and Stiglitz, 1984;Basri et al, 2018). This finding is also consistent with previous empirical evidence which have found that an increase in the minimum wage can enhance labour and firm productivity (Zhao and Sun, 2021;Herman, 2020;Dosi et al, 2020;Kim and Jang, 2019).…”

Section: Empirical Results From 2sls Estimationsupporting

confidence: 93%

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The role of wages, skills development and R&D on productivity: evidence from Thai manufacturing firms

Amornkitvikai

Harvie

Sangkaew

2022

JES

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PurposeThe objectives of this study are to investigate the role of wages, skills development and R&D on the productivity of Thai manufacturing firms, using data from the 2017 Industrial Census of Thailand.Design/methodology/approachThe paper uses two-stage least squares (2SLS) to examine the role of wages, skills development and R&D, as well as other vital factors, impacting productivity as measured by labour productivity and total factor productivity.FindingsThai manufacturing firms' technology in aggregate exhibits decreasing returns to scale. Increasing wages and skills development promote the labour productivity and total factor productivity (TFP) of Thai manufacturers. R&D is also shown to be vital in promoting the labour productivity and TFP of large firms, but not small firms. Foreign direct investment (FDI) and government support can significantly increase large and medium-sized firms' labour productivity and TFP. Financially constrained firms tend to perform more productively. However, older firms, larger firms, labour supply shortages and political instability adversely affect labour productivity and TFP.Practical implicationsUpskilling and improving HRD policies could move Thailand towards a knowledge-based and high-income country in the future. Intellectual property protection should be strengthened to boost the country's R&D. The government should consider lifting restrictions on FDI to encourage international openness. The Thai Board of Investment’s promotion should target Thai manufacturing firms and FDI.Originality/valueThis study is the first to examine in detail the role of wages, skills development and R&D on the productivity of Thai firms based on the 2017 Thailand Industrial Census.

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Section: Empirical Results From 2sls Estimationsupporting

confidence: 93%

“…, 2018). This finding is also consistent with previous empirical evidence which have found that an increase in the minimum wage can enhance labour and firm productivity (Zhao and Sun, 2021; Herman, 2020; Dosi et al. , 2020; Kim and Jang, 2019).…”

Section: Resultssupporting

confidence: 93%

The role of wages, skills development and R&D on productivity: evidence from Thai manufacturing firms

Amornkitvikai

Harvie

Sangkaew

2022

JES

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“…However, on April 6, 2000 the right-wing government announced (and later decided unilaterally) that it would raise the minimum wage from 25,500 HUF to 40,000 HUF in January 2001 and also pledged to increase the minimum wage further to 50,000 HUF in 2002. 5 This announcement was rather unexpected, since the radical increase of the minimum wage had not previously been part of the political discourse. 6 For instance, the unions were demanding a 13 percent increase in minimum wage at the pre-negotiations, so a government proposal to double the nominal minimum wage in two years was above all expectations (Tóth 2001).…”

Section: A Institutional Contextmentioning

confidence: 99%

“…The council sets the minimum monthly base earnings (total earnings net of overtime pay, shift pay, and bonuses) for a full-time worker. For part-timers, accounting for only 5 percent of all employees in Hungary, the minimum is proportionally lower 5. The exchange rate was 280 HUF/US$ on January 1, 2001, so the monthly base earnings was increased from $91 to $179 6.…”

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confidence: 99%

Who Pays for the Minimum Wage?

Lindner

Harasztosi

2019

American Economic Review

254

169

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This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the reform; that around 75 percent of the minimum wage increase was paid by consumers and 25 percent by firm owners; that firms responded to the minimum wage by substituting labor with capital; and that disemployment effects were greater in industries where passing the wage costs to consumers is more difficult. We estimate a model with monopolistic competition to explain these findings. (JEL J23, J24, J31, J38, L13)

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“…The spillover effect (long-term) generated by the minimum wage increase is another aspect of the problem. According to Zhao and Sun's [20] findings, the increase of the minimum wage has a direct positive impact on the workers' efforts during their working hours. The spillover effect due to the minimum wage is confirmed by the results.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of the Minimum Wage on Employment: An EU Panel Data Analysis

et al. 2021

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Minimum wage laws have become one of the most debated state interventions in the economy, being considered by many specialists as a very efficient tool used to correct certain labour market failures. The aim of this paper is to explore the relationship between minimum wage and employment dynamics, with a special focus on some vulnerable categories recognized in the literature (young people, female workers, the elderly, etc.). Thus, we analysed the relation between the dynamics of minimum wages and that of employment in 22 EU countries, panel data (1999–2016). The results suggest a negative impact of the minimum wage on total employment and on sensitive categories (youth, female workers, the elderly). The long-running negative impact holds for all but one group (55–64 years). The models were tested for random and fixed effects and the results were correspondingly adjusted with country and time and random and fixed effects. Cointegration tests and the tests using lagged minimum wage also confirm a robust relationship between the dynamics of the minimum wage and that of employment over time. Our findings are consistent with many previous studies and confirm the recommendations to prudently use this public policy tool.

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Effects of minimum wage on workers’ on-the-job effort and labor market outcomes

Cited by 8 publications

References 22 publications

The role of wages, skills development and R&D on productivity: evidence from Thai manufacturing firms

The role of wages, skills development and R&D on productivity: evidence from Thai manufacturing firms

Who Pays for the Minimum Wage?

The Impact of the Minimum Wage on Employment: An EU Panel Data Analysis

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