ESTIMATING THE EFFECT OF AN INCREASE IN THE MINIMUM WAGE ON HOURS WORKED AND EMPLOYMENT IN IRELAND. ESRI SURVEY AND STATISTICAL REPORT SERIES, April 2018

McGuinness, Seamus and Redmond, Paul (2018) ESTIMATING THE EFFECT OF AN INCREASE IN THE MINIMUM WAGE ON HOURS WORKED AND EMPLOYMENT IN IRELAND. ESRI SURVEY AND STATISTICAL REPORT SERIES, April 2018. UNSPECIFIED.

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Abstract

Using data from the Quarterly National Household Survey (QNHS) for the years 2015 and 2016, we estimate the effect of the increase in the minimum wage on both the hours worked and likelihood of job loss among minimum wage workers using a difference-in-differences estimator. We find that the increase in the minimum wage had a negative and statistically significant impact on the hours worked of low paid workers, with a weekly reduction of approximately one hour. We split the sample based on the type of contract, temporary or permanent, and find a relatively large impact for temporary workers in the order of 3.5 hours per week. However, further examination of the data reveals that at least some of the observed effect may be attributed to an increase in voluntary PT employment among minimum wage workers, suggesting that the decline in average hours among the treatment group may have been driven, at least to some extent, by an increase in the incentive to work part-time following the rate rise. Our results are robust to both placebo tests for years where no change in the MW rate occurred and various alternative specifications. We do not find evidence that the increase in the minimum wage led to a rise in the rate of job loss among minimum wage workers.

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