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Discussion paper

The effect of minimum wage increases on wages, hours worked and job loss

15 May 2018
Description

Australia has a detailed system of ‘awards’ that specify different minimum wages depending on the industry, location and skill of an employee. Using job-level data from a survey of firms, this paper examines the effect of award wage changes on wages, hours worked and the job destruction rate. I exploit the fact that between 1998 and 2008, award wages were increased by a flat dollar amount each year (say, 50 cents per hour), irrespective of existing award wage levels. This led to larger award wage rises in percentage terms for jobs whose award wages were relatively low, compared to those on higher award wages. I find that adjustments to awards are almost fully passed on to wages in award-reliant jobs. I find no evidence that these small, incremental increases in award wages have an adverse effect on hours worked or the job destruction rate.

Publication Details
Issue: 
RDP 2018-06
Language: 
English
License Type: 
All Rights Reserved
Published year only: 
2018
102
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