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Employment Impacts and the New Minimum Wage Research

Employment Impacts and the New Minimum Wage Research

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Author

Tom McDonnell

Summary

The minimum wage was introduced in Ireland in 2000 and currently stands at €8.65 an hour. Legal national minimum wages now exist in most countries (including 21 European Union countries) and where national minimum wages do not exist there are invariably sectorally agreed minimum wages which operate as wage floors. There is a range of competing theories in the academic literature about the various impacts of the national minimum wage on outcomes such as total and sectoral employment, wages and prices, income equality and poverty. The most common criticism of the minimum wage is that it could increase poverty by increasing the number of people who are unemployed or by reducing hours for those in employment. While the available empirical evidence is ambiguous, inconclusive and often contradictory with regard to employment effects, the results of the most comprehensive meta-studies (studies of studies) strongly suggest that minimum wages exert no significant impact on an economy’s overall level of employment.

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