Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250604 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14943
Publisher: 
Institute of Labor Economics (IZA), Bonn
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 wage floors. We find a relatively larger pass-through of firm-specific labor-demand shocks into wages for the workers whose earnings are far from the floors, but who are employed by establishments intensive in minimum-wage workers. We study the welfare implications of this fact using an incomplete-market model. The asymmetric passthrough uncovers a novel channel which tilts the benefits of removing minimum wages toward high-paid employees at the expense of low-wage workers.
Subjects: 
firm-specific shocks
pass-through
minimum wages
linked employer-employee data
general equilibrium
complementarities
JEL: 
E24
E25
E64
J31
J38
J52
Document Type: 
Working Paper

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