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Labor costs and profitability

Banque de France - PARIS - 2017

The minimum wage was made to guarantee workers a minimum income. Studies have shown that increasing the minimum wage drives wages up, but does not stimulate job creation. The extra cost must therefore be absorbed by another factor. Draca, Machin, Van Reenen (2011) use the instalment of the British minimum wage to study how company profit margins have reacted. Similarly, we will use French data to study this question, especially in light of the 2003/2005 convergence of cross-sector minimum hourly wage which has had a heterogeneous impact on French companies, according to their pre 2003 minimum hourly wage level.