摘要:Although there is a large literature on the economic effects of minimum wages on
labour market outcomes (especially employment), there is hardly any evidence on
their impact on firm performance. This is surprising: minimum wages appear to
have a significant impact on wages, but only a limited impact on jobs, so it is
natural to imagine there must be a stronger impact on other aspects of firm
behaviour. In this paper we consider the impact of minimum wages on firm
profitability by exploiting the introduction of a minimum wage to the UK labour
market in 1999. We use pre-policy information on the distribution of wages to
construct treatment and comparison groups and implement a difference in
differences approach. We show evidence that firm profitability was significantly
reduced (and wages significantly raised) by the minimum wage introduction. This
emerges from separate analyses of two distinct types of firm level panel data
(one on firms in a very low wage sector, UK residential care homes, and a second
on firms across all sectors). Interestingly, we find no evidence that the
profitability reductions resulted in increases in firm exit, so our findings may
be consistent with redistribution of quasi-rents towards low wage employees.