John M. Abowd, Francis Kramarz, Thomas Lemieux, David N. Margolis
Abstract
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-A-vis 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 increases the probability that a young man employed at the minimum wage will lose his job by 6.56%. In the United States, a decrease in the real minimum of 1% increases the probability that a man employed at the minimum wage came from nonemployment by 7.68%. These effects get worse with age in the United States, and are mitigated by eligibility for special employment promotion contracts in France.