The Minimum Wage Effects on Earnings and Sorting

We study Thailand’s 2012–2013 nationwide minimum-wage reform, which raised wage floors by over 40 percent. Using matched employer–employee data and a discrete-type model of wages and mobility, we estimate effects on earnings, employment, and sorting. Earnings rise sharply at the bottom with spillovers above the new minimum; employment effects are modest and concentrated among the long-term non-employed. Simulations show sizable lifetime-earnings gains, mainly from higher wages and mobility for high-turnover workers. Entry wages rise for low- and mid-wage workers, but tenure growth flattens most for mid-wage workers. Assortative matching weakens, and wage-based upgrading need not align with revealed job preferences.