Minimum wage and financially distressed firms: Another one bites the dust

Detalhes bibliográficos
Autor(a) principal: Alexandre, F.
Data de Publicação: 2022
Outros Autores: Bação, P., Cerejeira, J., Costa, H., Portela, M.
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
Texto Completo: https://hdl.handle.net/10316/96945
https://doi.org/10.1016/j.labeco.2021.102088
Resumo: Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.
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spelling Minimum wage and financially distressed firms: Another one bites the dustFinancially distressed firmsJEL classification J38JEL classification L25Minimum wagesProductivitySince late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.This work is financed by National Funds of the FCT Portuguese Foundation for Science and Technology, projects UID/ECO/03182/2020, UIDB/05037/2020 and PTDC/EGE-ECO/29822/2017 (‘Its All About Productivity: contributions to the understanding of the sluggish performance of the Portuguese economy’). Hèlder Costa acknowledges the funding by FCT, scholarship 2020.04643.BD.Elsevier2022info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articlehttps://hdl.handle.net/10316/96945https://hdl.handle.net/10316/96945https://doi.org/10.1016/j.labeco.2021.102088eng09275371https://www.sciencedirect.com/science/article/pii/S0927537121001238Alexandre, F.Bação, P.Cerejeira, J.Costa, H.Portela, M.info:eu-repo/semantics/openAccessreponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiainstacron:RCAAP2025-03-25T12:00:44Zoai:estudogeral.uc.pt:10316/96945Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireinfo@rcaap.ptopendoar:https://opendoar.ac.uk/repository/71602025-05-29T05:45:32.148713Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiafalse
dc.title.none.fl_str_mv Minimum wage and financially distressed firms: Another one bites the dust
title Minimum wage and financially distressed firms: Another one bites the dust
spellingShingle Minimum wage and financially distressed firms: Another one bites the dust
Alexandre, F.
Financially distressed firms
JEL classification J38
JEL classification L25
Minimum wages
Productivity
title_short Minimum wage and financially distressed firms: Another one bites the dust
title_full Minimum wage and financially distressed firms: Another one bites the dust
title_fullStr Minimum wage and financially distressed firms: Another one bites the dust
title_full_unstemmed Minimum wage and financially distressed firms: Another one bites the dust
title_sort Minimum wage and financially distressed firms: Another one bites the dust
author Alexandre, F.
author_facet Alexandre, F.
Bação, P.
Cerejeira, J.
Costa, H.
Portela, M.
author_role author
author2 Bação, P.
Cerejeira, J.
Costa, H.
Portela, M.
author2_role author
author
author
author
dc.contributor.author.fl_str_mv Alexandre, F.
Bação, P.
Cerejeira, J.
Costa, H.
Portela, M.
dc.subject.por.fl_str_mv Financially distressed firms
JEL classification J38
JEL classification L25
Minimum wages
Productivity
topic Financially distressed firms
JEL classification J38
JEL classification L25
Minimum wages
Productivity
description Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.
publishDate 2022
dc.date.none.fl_str_mv 2022
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv https://hdl.handle.net/10316/96945
https://hdl.handle.net/10316/96945
https://doi.org/10.1016/j.labeco.2021.102088
url https://hdl.handle.net/10316/96945
https://doi.org/10.1016/j.labeco.2021.102088
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv 09275371
https://www.sciencedirect.com/science/article/pii/S0927537121001238
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
instacron:RCAAP
instname_str FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
instacron_str RCAAP
institution RCAAP
reponame_str Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
collection Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
repository.name.fl_str_mv Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
repository.mail.fl_str_mv info@rcaap.pt
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