Fairness Perceptions and Reservation Wages?The Behavioral Effects of Minimum Wage Laws*

Falk, Armin; Fehr, Ernst; Zehnder, Christian

doi:10.1162/qjec.121.4.1347

Cited by 77 publications

(65 citation statements)

References 34 publications

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“…6 See, for example, Agell and Lommerud (1997), or for a discussion of the possible impacts of minimum wages from a behavioural perspective, see Falk, Fehr and Zehnder (2006). 7 The country studies focus on Brazil, Chile, Colombia, Costa Rica, Indonesia, Mexico, Puerto Rico, and Trinidad and Tobago. reviewed by the authors reveal either no effects or small negative employment effects of minimum wages in LMI country settings.…”

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confidence: 99%

Minimum Wages in Sub-Saharan Africa: A Primer

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Although the sectors and fraction of workers covered are small given the low rates of formality and urbanization in Sub-Saharan Africa (SSA), as the number of covered workers grows wage regulation will become increasingly significant. We find that higher minimum wage values are associated with higher GDP per capita. Importantly, however, we find that the minimum wage relative to the mean wage is higher in low income countries than in lowerand upper-middle income countries. Indeed, SSA as a whole reflects a bias towards a more aggressive minimum wage policy compared to the rest of the world. There is limited research on the employment effect of minimum wages in SSA, but the few findings are consistent with the broad summary of global research. By and large, introducing and raising the minimum wage has a small negative impact or no measurable negative impact. However, there is significant variation around this average finding -the employment elasticities are not constant nor linear. Where increases in a minimum wage are large and immediate, this can result in employment losses, but more modest increases usually have very little observably adverse effects and may have positive impacts on wages. The great variability in findings on employment could be due partly to the great variation in the detail of the minimum wage regimes and schedules country by country, but also by the variations in compliance. We find that higher Kaitz indices are associated with higher levels of non-compliance. The release of country-level earnings and employment data at regular intervals lies at the heart of a future country-focused minimum wage research agenda for Africa. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Minimum Wages in Sub-JEL Classification: J08, J20, J21, J30, J38

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confidence: 99%

Minimum Wages in Sub-Saharan Africa: A Primer

2017

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“…In such an experiment, Falk et al (2006) find a strong relationship between minimum wages and reservation wages. It seems that minimum wages define standards of fairness which are taken as a reference in future expectations of acceptable wages.…”

Section: Studies Based On Laboratory Experimentsmentioning

confidence: 96%

Minimum wages in German industries—what does the evidence tell us so far?

Möller

2012

J Labour Market Res

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Abstract Since the effects of a minimum wage on wages and employment are depending on a bunch of factors and are by no means determined theoretically in an unambiguous way, empirical analysis is required. German studies on the effects of minimum wages in the past often did not meet international methodological standards. International minimum wage research today is typically based on micro data analysis. Hereby the development of economic variables before and after the introduction of a minimum wage for a treatment group is compared to that of a control group (difference-in-difference approach). A corresponding method is applied in a series of recent German studies aiming at the evaluation of the introduction of the minimum wage in a number of industrial branches. Through these studies minimum wage research in Germany has made substantial progress and caught up to standards of the international literature. However, there are still open methodological questions that are discussed in this article. A central finding from the existing minimum wage studies in Germany is that disemployment effects are hard to find. By contrast, wage effects can be identified in most studies, especially in the eastern part of Germany. Terms of use: Documents in Keywords Minimum wages

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“…Of course, for a given reservation wage, variations in the minimum wage may affect the willingness of workers to accept a job, but the legal minimum wage is assumed to have no effect on the reservation wage. In a recent laboratory minimum wage experiment, Falk, Fehr and Zehnder (2006) show that the subjects' reservation wages differ depending on whether they have previously experienced a situation with a minimum wage or not. Subjects who had experienced a minimum wage previously, but for whom the minimum wage was abolished, displayed much higher reservation wages compared to subjects who had never experienced a minimum wage.…”

Section: Endogenous Preferences and The Role Of The Law: Entitlementsmentioning

confidence: 99%