IZA DP No. 10290: Understanding Wage Floor Setting in Industry-Level Agreements: Evidence from France
This paper examines empirically how industry-level wage floors are set in French industry-level wage agreements and how the national minimum wage (NMW) interacts with industry-level wage bargaining. For this, the authors use a unique dataset containing about 50,000 occupation-specific wage floors in 365 French industries over the period 2007-2015. They find that the NMW has a significant impact on the seasonality and on the timing of the wage bargaining process. Inflation, past sectoral wage increases and real NMW increases are the main drivers of wage floor adjustments; elasticities of wage floors with respect to these macro variables are 0.6, 0.4 and 0.2 respectively. Wage floor elasticities to inflation and to the NMW both decrease along the wage floor distribution but are still positive for all levels of wage floors.