Affiliation:
1. Emiel van Bezooijen is a PhD Candidate at the Utrecht School of Economics and a Researcher at CPB Netherlands Bureau for Economic Policy Analysis. Wiljan van den Berge is an Assistant Professor at the Utrecht School of Economics and a Researcher in Labor at CPB Netherlands Bureau for Economic Policy Analysis. Anna Salomons is a Professor at the Utrecht School of Economics and a Research Fellow at the Institute of Labor Economics (IZA)
Abstract
The authors estimate the effects of an increase in the youth minimum wage in the Netherlands on low-paid workers’ employment and earnings, using a difference-in-differences approach with detailed administrative data. Findings show that the increase does not have a negative effect on the number of jobs or hours worked, hence raising overall earnings for affected workers. Further, the minimum wage increase has substantial spillover effects, accounting for close to 70% of the average wage increase experienced by workers. While employment grows in fixed-term and temporary help agency contracts, the authors do not find evidence of declines in employment in other types of work arrangements, nor of labor-labor substitution. Labor market outcomes evolve most favorably for full-time incumbent workers who are not enrolled in education and are thus less likely to be transient occupants of minimum wage jobs.