The presentation will be done in English by Simona Ferraro and Orsolya Soosaar (TalTech Department of Economics and Finance).
According to most empirical studies, minimum wages have not led to significant reductions in employment. This implies, that firms adjust to labour cost increases due to minimum wages through other channels. This paper investigates whether this adjustment takes place through productivity using data on the Estonian national minimum wage increases. Using employee-employer data the effect of the minimum wage increases are identified by comparing the trends in productivity of firms that are more affected by the minimum wage increase with the trends of firms less affected. Results suggest that the minimum wage increases did have a positive effect on the labour productivity for the affected firms.