Can minimum wages cause a big push? Evidence from Indonesia

• 成果类型: Article
• 署名作者: Magruder, Jeremy R.
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2012.07.003
• 发表日期: 2013
• 页码: 48-62
• 关键词: Minimum wage; Big push; Spatial regression discontinuity

摘要

Big Push models suggest that local product demand can create multiple labor market equilibria: one featuring high wages, formalization, and high demand and one with low wages, informality, and low demand. I demonstrate that minimum wages may coordinate development at the high wage equilibrium. Using data from 1990s Indonesia, where minimum wages increased in a varied way, I develop a difference in spatial differences estimator which weakens the common trend assumption of difference in differences. Estimation reveals strong trends in support of a big push: formal employment increases and informal employment decreases in response to the minimum wage. Local product demand also increases, and this formalization occurs only in the non-tradable, industrializable industries suggested by the model (while employment in tradable and non-industrializable industries also conforms to model predictions). (C) 2012 Elsevier B.V. All rights reserved.