Minimum wages and youth employment: decreasing the wages had no effect on youth employment

This article, “Minimum wages and youth employment: Evidence the Finnish retail trade sector” is proving that in Finland, in the 90s, letting employers the possibility to pay less young people had practically no effect. It has been written by Petri Böckerman for the Labour Institute for Economic Research, and Roope Uusitalo for the Labour Institute for Economic Research and the Institute for Labour Market Policy Evaluation.

Abstract

Following an agreement between the trade unions and the employer organisations,
Finnish employers could pay less than the existing minimum wage for young workers
between 1993 and 1995. We examine the effects of these minimum wage exceptions
by comparing the changes in wages and employment of the groups whose minimum
wages were reduced with simultaneous changes among slightly older workers for
whom the minimum wage regulation was still binding. Our analysis is based on the
payroll record data and minimum wage agreements from the retail trade sector over
the period 1990-2005. We discover that average wages in the eligible group declined
only modestly despite the fact that the excess supply of labour during high
unemployment should make it relatively easy to attract workers even with low wages.
The minimum wage exceptions had no positive effects on employment.

Does outward foreign direct investment reduce domestic investment? Macro-evidence from Finland

Interesting article from Pekka Sauramo, who shows that direct investment in foreign countries prevent investors from investing in their country, which can be a real problem, except perhaps for big countries. It is part of a research project which has been financed by the Finnish Academy and the Finnish Work Environment Fund. Pekka Sauramo works for the Labour Institute for Economic Research, in Helsinki, Finland.

ABSTRACT
The paper is concerned with the relationship between outward foreign direct investment (FDI) and
domestic investment in Finland during the post-depression years of low domestic investment
activity. The relationship is analysed by the use of macroeconomic data on the period from 1965 till
2006 and through the estimation of dynamic investment equations which are based on the macroeconomic
framework employed by Feldstein (1994).