Who Pays for and Who Benefits from Minimum Wage Increases? Evidence from Israeli Tax Data on Business Owners and Workers
Lev Drucker, Katya Mazirov, David Neumark
A key goal of a higher minimum wage is income redistribution towards low-income families. Existing research on the minimum wage focuses on the impact on affected workers, but is silent on the incomes of the owners of businesses who pay for a higher minimum wage. Higher minimum wages will do more to redistribute income if the owners of businesses who pay the higher minimum are at the top of the income distribution, and conversely if minimum wage employers hare relatively low incomes, the redistributional effects are weakened. We study evidence on this question using a unique administrative dataset on the universe of tax records for Israel, in the period surrounding a large minimum wage increase. We find that the minimum wage hike reduced profits of companies, with minimum-wage intensive companies bearing the bulk of the cost and adjusting their workforces more aggressively, and profits declining more for lower-income business owners. Moreover, owners of businesses with higher shares of minimum-wage workers ranked at the bottom of the income distribution of business owners, and their incomes were comparable to those of mid-to-high level workers. In most cases, spouses of business owners earn less than the owners while spouses of minimum-wage workers earn more, further reducing the redistributive effect of the minimum wage increase
Year of publication: |
December 2019
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Authors: | Drucker, Lev |
Other Persons: | Mazirov, Katya (contributor) ; Neumark, David (contributor) |
Institutions: | National Bureau of Economic Research (contributor) |
Publisher: |
2019: Cambridge, Mass : National Bureau of Economic Research |
Subject: | Israel | Mindestlohn | Minimum wage | Wirkungsanalyse | Impact assessment | Unternehmenserfolg | Firm performance | Unternehmen | Enterprise |
Saved in:
freely available
Extent: | 1 Online-Ressource illustrations (black and white) |
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Series: | NBER working paper series ; no. w26571 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | System requirements: Adobe [Acrobat] Reader required for PDF files Mode of access: World Wide Web Hardcopy version available to institutional subscribers |
Other identifiers: | 10.3386/w26571 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012480515