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Title: Minimum wage and financially distressed firms: another one bites the dust
Authors: Alexandre, Fernando
Bação, Pedro Miguel Avelino 
Cerejeira, João
Costa, Hélder
Portela, Miguel
Keywords: minimum wage, financially distressed firms, productivity
Issue Date: 24-Jul-2020
Series/Report no.: CeBER Working Paper 2020-14;
Place of publication or event:
Abstract: Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.
Rights: openAccess
Appears in Collections:I&D CeBER - Working Papers

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