Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300117 
Year of Publication: 
2023
Series/Report no.: 
HFI Working Paper No. 26
Publisher: 
Institute of Retail Economics (HFI), Stockholm
Abstract: 
We use a youth payroll tax cut in Sweden to investigate whether retail firms that were exposed to substantial labor cost savings increased employment of minimum wage workers more than firms that received smaller labor cost savings. Our dataset includes information on both contracted wages and working hours for most employees in the Swedish retail trade industry. The fact that a large portion of retail employees had contracted wages near the negotiated minimum wage levels at the time of the reform suggests that the minimum wage levels were binding to a great extent. We also find that retail firms with large labor cost savings due to the youth payroll tax cut significantly increased both the number of minimum wage hourly employees and their working hours. We observe no such effects for employees with long-term contracts or wages well above the negotiated minimum wages. This suggests that the relatively high minimum wage levels of the Swedish retail industry prevent the employment of workers who are perceived to have low productivity.
Subjects: 
Retail trade industry
minimum wages
payroll tax reform
natural experiments
collective bargaining
JEL: 
D24
L25
L26
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.