%0 Report
        %A Gregory, Terry
%A Zierahn-Weilage, Ulrich
        %T When the Minimum Wage Really Bites Hard: Impact on Top Earners and Skill Supply
        %D 2020
        %8 2020 Aug
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 13633
        %U https://www.iza.org/publications/dp13633
        %X This paper provides new insights into how wages and employment adjust to a minimum wage policy along different wage and skill groups. For this, we exploit a quasi-experimental setting in the 1990s, where a German industry introduced a minimum wage at an extraordinary high level during an economic downturn with falling revenues. We find positive wage spillovers to medium-skilled workers with wages just above the minimum wage. More striking, we also find negative wage effects for high-skilled workers situated higher up in the wage distribution, followed by reduced returns to skills and skill supply in the industry. We explain these adjustments, both theoretically and empirically, with a substitution-scale model that predicts negative spillovers whenever labour demand shifts from low- to more skilled workers (substitution effect) are overcompensated by an overall decline in labour demand (scale effect).
        %K scale effect
%K unconditional quantile regression
%K returns to skills
%K spillover effects
%K wage restraints
%K wage effects
%K minimum wages
%K substitution effect
%K skill supply