Chair of Econometrics

Speaker:
Effrosyni Adamopoulou (University of Mannheim)

Minimum Wages and Insurance within the Firm

^{(with Francesco Manaresi, Omar Rachedi, and Emircan Yurdagul)}

Abstract: Minimum wages alter the allocation of firm-idiosyncratic risk across workers.To establish this result, we focus on Italy, and leverage employer-employee data matched to firm balance sheets and hand-collected occupation-specific wage floors.We find a relatively larger pass-through of firm-specific productivity shocks into the wages of the high-paid workers employed by establishments intensive in minimum wage workers. We study the welfare implications of this fact using an incomplete-market model with heterogeneous firms and heterogeneous workers. Th‘e asymmetric pass-through uncovers a novel channel which tilts the welfare gains of removing minimum wages toward high-wage employees at the expense of low-paid workers.

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