Minimum Wage and the Labor Market: What Can We Learn from the French Experience? (original) (raw)

The Tail of Two Countries: Minimum Wages and Employment in France and the United States

SSRN Electronic Journal, 2000

We use longitudinal individual wage and employment data in France and the United States to investigate the effect of changes in the real minimum wage rate on an individual's employment status. We focus on workers employed at wages close enough to the minimum in a reference year as to be illegal in an adjacent comparison year as a result of movements in the real minimum wage. We find that movements in the American real minimum wage are associated with no employment effects, whereas movements in the cost of French minimum wage workers are associated with very strong negative employment effects. Our analysis is based upon identifying the direct effect of the change in the real minimum wage rate on exits from (entry into) employment when the real minimum wage rate increases (respectively, decreases) and identifying the heterogeneity in the behavior of our treatment and control groups using a pseudoexperimental contrast. We relate the difference-indifference estimator directly to demand and supply elasticities for the two groups.

of LaborThe Tail of Two Countries: Minimum Wages and Employment in France and the United States

2014

This Discussion Paper is issued within the framework of IZA’s research area The Future of Work. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to...

Minimum wages and youth employment in France and the United States

1997

We use longitudinal individual wage and employment data for young people in France and the United States to investigate the effect of intertemporal changes in an individual's status vis-àvis the real minimum wage on employment transition rates. We find that movements in both French and American real minimum wages are associated with relatively important employment effects in general, and very strong effects on workers employed at the minimum wage. In the French case, albeit imprecisely estimated, a 1% increase in the real minimum wage decreases the employment probability of a young man currently employed at the minimum wage by 2.5%. In the United States, a decrease in the real minimum of 1% increases the probability that a young man employed at the minimum wage came from nonemployment by 2.2%. These effects get worse with age in the United States, and are mitigated by eligibility for special employment promotion contracts in France.

Low Pay, Employment and Labor Market Regulation: Lessons from France?

2012

It is conventional to define low pay as less than 2/3 of the median wage. The low‐wage share US employment has been stable at around 30 percent since the 1970s, a level far higher than any other wealthy country. This stability has masked enormous increases in low‐pay incidence for young workers, including those with more than a high school degree.

Proposal for a Directive on adequate minimum wages in the European Union: a look at French law

2021

On October 28, 2020, the European Commission published a Proposal for Directive 2020/0310 on adequate minimum wages in the European Union. The project was expected and the result is both ambitious and modest. Ambitious because the Commission calls for the determination of criteria to define an “adequate minimum wage” or “decency threshold”: reality of purchasing power, general level of wages and their distribution, average wage increases, labour productivity. To achieve this result, the project intends to promote the action of the social partners ant the lever or collective bargaining. But the project is also modest because the difficulty lies in avoiding the opposition of Member States that would result from their legal competence in determining wages and representing workers in collective bargaining. The drafting of the proposal is both cautious and often not very restrictive. The impact on French law will undoubtedly be relative, as the French tradition of collective bargaining o...

Understanding Wage Floor Setting in Industry-Level Agreements: Evidence from France

Labor: Public Policy & Regulation eJournal, 2016

This paper examines empirically how industry-level wage floors are set in French industry-level wage agreements and how the national minimum wage (NMW) interacts with industry-level wage bargaining. For this, the authors use a unique dataset containing about 50,000 occupation-specific wage floors in 365 French industries over the period 2007-2015. They find that the NMW has a significant impact on the seasonality and on the timing of the wage bargaining process. Inflation, past sectoral wage increases and real NMW increases are the main drivers of wage floor adjustments; elasticities of wage floors with respect to these macro variables are 0.6, 0.4 and 0.2 respectively. Wage floor elasticities to inflation and to the NMW both decrease along the wage floor distribution but are still positive for all levels of wage floors.

Does work pay in France? Monetary incentives, hours constraints, and the guaranteed minimum income

Journal of Public Economics, 2008

This paper uses a representative sample of individuals on France's main welfare program (the Revenu Minimum d'Insertion, or RMI) to estimate monetary incentives for employment among welfare recipients. Based on the estimated joint distribution of wages and hours potentially oered to each individual, we compute potential gains from working in a very detailed manner. Relating these gains to observed employment, we then estimate a simple structural labor supply model. We nd that potential gains are almost always positive but very small on average, especially for single mothers, because of the high implicit marginal tax rates embedded in the system. Employment rates are sensitive to incentives with extensive margin elasticities for both men and women usually below one. Conditional on these elasticities, simulations indicate that existing policies devoted to reducing marginal tax rates at the bottom of the income distribution, such as the intéressement earnings top-up program, have little impact in this population due to their very limited scope. The recently introduced negative income tax (Prime pour l'emploi), seems to be an exception.