Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland

On the 1st of January 2016 the Irish National Minimum Wage (NMW) increased from €8.65 to €9.15 per hour, an increase of approximately six percent. We use a difference-in-differences estimator to evaluate whether the change... [ view full abstract ]

On the 1st of January 2016 the Irish National Minimum Wage (NMW) increased from €8.65 to €9.15 per hour, an increase of approximately six percent. We use a difference-in-differences estimator to evaluate whether the change in the NMW affected the hours worked and likelihood of job loss of minimum wage workers. The results indicate that the increase in the minimum wage had a negative and statistically significant effect on the hours worked of minimum wage workers, with an average reduction of approximately one hour per week. The effect of the increase in the minimum wage appears to have a relatively large effect on low paid temporary workers, with a weekly reduction of approximately 3.5 hours per week. We find no clear evidence that the increase in the NMW rate caused an increase in the proportions of minimum wage workers becoming unemployed or inactive in the six month period following the rate change.