Replication data for: Minimum Wages and Firm Profitability

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Project Citation:

Draca, Mirko, Machin, Stephen, and Van Reenen, John. Replication data for: Minimum Wages and Firm Profitability. Nashville, TN: American Economic Association [publisher], 2011. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113772V1

Project Description

Summary: We study the impact of minimum wages on firm profitability, exploiting the changes induced by the introduction of a UK national minimum wage in 1999. We use pre-policy information on the distribution of wages to implement a difference-in-differences approach. Minimum wages raise wages, but also significantly reduce profitability (especially in industries with relatively high market power). This is consistent with a simple model where wage gains from minimum wages map directly into profit reductions. There is some suggestive evidence of longer run adjustment to the minimum wage through falls in net entry rates. (JEL J31, J38, L25)

Scope of Project

JEL Classification:
      J31 Wage Level and Structure; Wage Differentials
      J38 Wages, Compensation, and Labor Costs: Public Policy
      L25 Firm Performance: Size, Diversification, and Scope

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V1 [2019-10-12]

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