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Dao, Ngoc (2024): Federal minimum wage expansion to homecare workers: Employment and income effects. In: Labour Economics, Jg. 87. DOI:10.1016/j.labeco.2024.102511

Abstract

"The rapid growth of the home care industry coincides with increases in the proportion of the population over 65 years of age and more likely to need assistance with basic daily activities due to illness or disability. Yet, the growth in home care use has been accompanied by concerns about the quality of the care provided. Higher wages and better legal protection might improve the quality of home health care services. This study examines the 2013 Home Care Rule promulgated by the Department of Labor, which added home care workers to the groups covered under the federal minimum wage with minimum hourly and overtime rates. The results show large effects (7–9 %) on part-time employment increase, small effects on work hour reduction (by 2–4 %), and nonnegative effect on overall employment level following the expansion. Despite the decline in hours worked, there is no negative impact on earnings among homecare workers." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Lenhart, Otto & Kalyan Chakraborty (2024): Income assistance programs and population health – The dual impact of minimum wages and the earned income tax credit. In: Economics Letters, Jg. 234. DOI:10.1016/j.econlet.2023.111508

Abstract

"In this study, we provide new evidence on the interaction of state-level minimum wages and Earned Income Tax Credit (EITC) laws on several measures of population health. Using data from the National Vital Statistics Reports between 1999 and 2018, we estimate difference-in-differences models to evaluate the dual impact of minimum wages and the EITC on various causes of mortality, such as suicides, motor accidents and assaults. While several researchers have examined the health effects of both these policies separately, few studies have examined the potential interaction effects of these policies. Specifically, while previous work has provided evidence that both minimum wages and the EITC can reduce suicide rates, our study contributes to the literature by showing that the policies have a positive dual impact on population health. We find that a $1 increase in minimum wages reduces death rates due to suicides and assaults by 3.8 percent and 15.2 percent in states with EITC laws, respectively. In contrast, we show that minimum wages do not impact these outcomes in states without state-level EITC laws." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Neumark, David (2024): The effects of minimum wages on (almost) everything? A review of recent evidence on health and related behaviors. In: Labour, Jg. 38, H. 1, S. 1-65. DOI:10.1111/labr.12263

Abstract

"I review and assess the evidence on minimum wage effects on health outcomes and health‐related behaviors. The evidence on physical health points in conflicting directions, leaning toward adverse effects. Research on effects on diet and obesity sometimes points to beneficial effects, whereas other evidence indicates that higher minimum wages increase smoking and drinking and reduce exercise (and possibly hygiene). In contrast, there is evidence that higher minimum wages reduce suicides, partly consistent with the evidence of positive or mixed effects on other measures of mental health/depression. Overall, policy conclusions that minimum wages improve health are unwarranted or at least premature." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Brandon, Alec, Justin E. Holz, Andrew Simon & Haruka Uchida (2023): Minimum Wages and Racial Discrimination in Hiring: Evidence from a Field Experiment. (Upjohn Institute working paper 389), Kalamazoo, Mich., 90 S. DOI:10.17848/wp23-389

Abstract

"When minimum wages increase, employers may respond to the regulatory burdens by substituting away from disadvantaged workers. We test this hypothesis using a correspondence study with 35,000 applications around ex-ante uncertain minimum wage increases in three U.S. states. Before the increases, applicants with distinctively Black names were 19 percent less likely to receive a callback than equivalent applicants with distinctively white names. Announcements of minimum wage hikes substantially reduce callbacks for all applicants but shrink the racial callback gap by 80 percent. Racial inequality decreases because firms disproportionately reduce callbacks to lower-quality white applicants who benefited from discrimination under lower minimum wages." (Author's abstract, IAB-Doku) ((en))

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Burkhauser, Richard V., Drew McNichols & Joseph J. Sabia (2023): Minimum Wages and Poverty: New Evidence from Dynamic Difference-in-Differences Estimates. (NBER working paper / National Bureau of Economic Research 31182), Cambridge, Mass, 97 S.

Abstract

"Advocates of minimum wage increases have long touted their potential to reduce poverty. This study assesses this claim. Using data spanning nearly four decades from the March Current Population Survey, and a dynamic difference-in-differences approach, we find that a 10 percent increase in the minimum wage is associated with a (statistically insignificant) 0.17 percent increase in the probability of longer-run poverty among all persons. With 95% confidence, we can rule out long-run poverty elasticities with respect to the minimum wage of less than -0.129, which includes central poverty elasticities reported by Dube (2019). Prior evidence suggesting large poverty-reducing effects of the minimum wage are (i) highly sensitive to researcher’s choice of macroeconomic controls, and (ii) driven by specifications that limit counterfactuals to geographically proximate states (“close controls”), which poorly match treatment states’ pre-treatment poverty trends. Moreover, an examination of the post-Great Recession era — which saw frequent, large increases in state minimum wages — failed to uncover poverty-reducing effects of the minimum wage across a wide set of specifications. Finally, we find that less than 10 percent of workers who would be affected by a newly proposed $15 federal minimum wage live in poor families." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2023): Does Wage Theft Vary by Demographic Group? Evidence from Minimum Wage Increases. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16550), Bonn, 30 S.

Abstract

"Using Current Population Survey data, we assess whether and to what extent the burden of "wage theft" - wage payments below the statutory minimum wage - falls disproportionately on various demographic groups following minimum wage increases. For most racial and ethnic groups at most ages we find that underpayment rises similarly as a fraction of realized wage gains in the wake of minimum wage increases. We also present evidence that the burden of underpayment falls disproportionately on relatively young African American workers and that underpayment increases more for Hispanic workers among the full working-age population." (Author's abstract, IAB-Doku) ((en))

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Forsythe, Eliza (2023): The Effect of Minimum Wage Policies on the Wage and Occupational Structure of Establishments. In: Journal of labor economics, Jg. 41, H. S1, S. S291-S324. DOI:10.1086/726820

Abstract

"Using establishment-level panel data from the Occupational Employment and Wage Statistics program, I estimate the effect of minimum wage increases implemented by 10 states in 2014 and 2015. I show that minimum wage increases lead to wage spillovers within establishments. I find little evidence that minimum wage increases induce establishments to reorganize their occupational mix. Finally, I find that minimum wage increases propagate up the management hierarchy, leading to increased wages for supervisors. Nonetheless, I find overall wage inequality decreases within establishments after minimum wage increases." (Author's abstract, IAB-Doku) ((en))

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Gerritsen, Aart (2023): To Redistribute or to Predistribute? The Minimum Wage versus Income Taxation When Workers Differ in Both Wages and Working Hours. (CESifo working paper 10734), München, 53 S.

Abstract

"I consider the case for the minimum wage alongside (optimal) income taxes when workers differ in both wages and working hours, such that a given level of income corresponds to multiple wage rates. The minimum wage is directly targeted at the lowest-wage workers, while income taxes are at most targeted at all low-income workers, regardless of their hourly wage rates. This renders the minimum wage unambiguously desirable in a discrete-type model of the labor market. Desirability of the minimum wage is a priori ambiguous in a continuous-type model of the labor market. Compared to the minimum wage, income taxes are less effective in compressing the wage distribution but more effective in redistributing income. Desirability of the minimum wage depends on this trade-off between the “predistributional advantage” of the minimum wage and the “redistributional advantage” of the income tax. I derive a desirability condition for the minimum wage and write it in terms of empirical sufficient statistics. A numerical application to the US suggests a strong case for a higher federal minimum wage – especially if social preferences for the lowest-wage workers are relatively strong and the wage elasticity of labor demand relatively small." (Author's abstract, IAB-Doku) ((en))

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Glasner, Benjamin (2023): The Minimum Wage, Self-Employment, and the Online Gig Economy. In: Journal of labor economics, Jg. 41, H. 1, S. 103-127. DOI:10.1086/719690

Abstract

"This paper estimates the effect of minimum wage increases on work that is not covered by minimum wage laws. I find minimum wage increases in the early 2000s resulted in small reductions in engagement in traditional self-employment. Following the development of the online gig economy in the 2010s, a 10% increase in the minimum wage increased the number of non-employer establishments classified as transportation and warehousing services by approximately 2.7%. The counties most likely to exhibit a positive relationship between the minimum wage and participation in uncovered work are those with low labor market concentration and active Uber marketplaces." (Author's abstract, IAB-Doku) ((en))

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Hamilton, Reg & Matt Nichol (2023): One Hundred Years of Dynamic Minimum Wage Regulation: Lessons from Australia, the United Kingdom and the United States. In: International Labour Review, Jg. 162, H. 3, S. 407-429. DOI:10.1111/ilr.12380

Abstract

"Since the first minimum wage legislation was introduced in Australia, the United Kingdom and the United States in the early 1900s, minimum wage regulation has attracted controversy. Opponents of minimum wage levels rely on market theory, while supporters acknowledge the role of markets in setting the price of labour but justify state intervention based on principles of equity and social good. This article examines how these two ideological positions influenced fixing what is both a crucial cost for business and underpinning of worker and family living standards, and whether effective wage fixing has resulted. Little comparative research exists on the origins, evolution and current systems of minimum wage regulation in the three countries and this article aims to address this gap in the literature." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Hean, Oudom & Nanxin Deng (2023): The effects of minimum wages over the business cycle: the Great Recession. In: International Journal of Manpower, Jg. 44, H. 1, S. 19-36. DOI:10.1108/IJM-07-2021-0402

Abstract

"Purpose: This paper examines disemployment effects of minimum wages during the period 2002–2010. Design/methodology/approach: The authors employ the discontinuity design. Findings: The authors find that minimum wages had a significant negative impact on teen employment before the Great Recession. During the Great Recession, the disemployment effects of minimum wages were insignificant. The finding is consistent with the evolution of firms' market power during the business cycle. Originality/value: The authors attempt to reconcile the debate about the effects of minimum wages on US employment." (Author's abstract, IAB-Doku, © Emerald Group) ((en))

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Huet-Vaughn, Emiliano & Jon Piqueras (2023): The Asymmetric Effect of Wage Floors: A Natural Experiment with a Rising and Falling Minimum Wage. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16684), Bonn, 14 S.

Abstract

"Exploiting a unique natural experiment,we Show the asymmetric effects of a large increase and an equivalent subsequent decrease to a binding minimum wage. Wages in a leading low-wage industry increase as the Minimum wage rises, but do not fall when it is lowered. This boost for low-wage workers' earnings is apparently permanent five years after the policy is revoked, providing novel evidence of hysteresis in wage setting from temporary labor policy. In the first year post repeal this is consistent with downward nominal wage rigidity. But, the elevated earnings persist even in high inflation times, contrary to the prediction from existing work that real wage reductions under high inflation should erode the nominal wage gap relative to unaffected firms. Our findings thus challenge the conventional view that inflation "greases the wheels" of the labor market in the face of downward nominal wage rigidity, and, demonstrate the value of even transitory labor market policy in achieving permanent gains for workers (play it while you got it)." (Author's abstract, IAB-Doku) ((en))

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Meer, Jonathan & Hedieh Tajali (2023): Effects of the Minimum Wage on the Nonprofit Sector. (NBER working paper / National Bureau of Economic Research 31281), Cambridge, Mass, 37 S.

Abstract

"The nonprofit sector's ability to absorb increases in labor costs differs from the private sector in a number of ways. We analyze how nonprofits are affected by changes in the minimum wage utilizing data from the Bureau of Labor Statistics and the Internal Revenue Service, linked to state minimum wages. We examine changes in reported employment and volunteering, as well as other financial statements such as revenues and expenses. The results from both datasets show a negative impact on employment for states with large statutory minimum wage increases. We observe some evidence for a reduction in the number of nonprofit establishments, fundraising expenses, and revenues from contributions." (Author's abstract, IAB-Doku) ((en))

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Neumark, David (2023): The Effects of Minimum Wages on (Almost) Everything? A Review of Recent Evidence on Health and Related Behaviors. (NBER working paper / National Bureau of Economic Research 31191), Cambridge, Mass, 57 S.

Abstract

"The effects of minimum wages on employment, wages, earnings, and incomes, have been studied and debated for decades. In recent years, however, researchers have turned to the effects on a multitude of other behaviors and outcomes – largely related to health. I review and assess the large and growing body of evidence on minimum wage effects on a wide variety of health outcomes and health-related behaviors. The evidence on overall physical health is mixed. The findings on diet and obesity either point to beneficial or null effects, but not negative effects, while other evidence indicates that higher minimum wages increase smoking and reduce exercise. The evidence for mental health is ambiguous, with somewhat more studies finding no impact than finding a positive impact (but none finding a negative impact). And the evidence for suicide points clearly to beneficial effects of higher minimum wages. Studies on family structure and children point in different directions, with evidence that mothers spend more time with children, no clear indication of changes in treatment of children, but declines in children's test scores. The evidence generally points to minimum wages increasing risky behavior (drinking and smoking). Evidence on the effects of minimum wages on crime is mixed. The best evidence on employer-provided health insurance is more adverse, although Medicaid expansions under the Affordable Care Act (ACA) may have mitigated this influence, and there is not clear evidence of greater unmet medical needs. Other evidence suggests that higher minimum wages may affect health adversely via different channels." (Author's abstract, IAB-Doku) ((en))

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Oka, Tatsushi & Ken Yamada (2023): Heterogeneous Impact of the Minimum Wage: Implications for Changes in Between- and Within-group Inequality. In: The Journal of Human Resources, Jg. 58, H. 1, S. 335-362. DOI:10.3368/jhr.58.3.0719-10339R1

Abstract

"Most of the workers who earn at or below the minimum wage are either less educated, young, or female in the United States. We examine the extent to which the minimum wage influences the wage differential among workers with different observed characteristics and the wage differential among workers with the same observed characteristics. Our results suggest that changes in the real value of the minimum wage account in part for the patterns of changes in education, experience, and gender wage differentials and for most of the changes in within-group wage differentials for workers with lower levels of experience." (Author's abstract, IAB-Doku, © the Board of Regents of the University of Wisconsin System) ((en))

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Taylor, Garrett C. & James E. West (2023): Minimum wage effects within Census Based Statistical Areas: A matched pair cross-border analysis. In: Economics Letters, Jg. 229. DOI:10.1016/j.econlet.2023.111220

Abstract

"Using monthly data from major U.S. metropolitan areas that span state borders, we estimate the elasticity of employment with respect to the minimum wage using a difference-in-differences design with continuous treatment in two-digit industries of 71 (Arts, Entertainment and Recreation) and 72 (Accommodation and Food Services). In specifications that control for differences in state sales, personal and corporate income tax rates, we find a negative average causal response on the treated (ACRT) in six-digit industries where we expect large numbers of young, entry-level employees but positive correlations in other industries. Our results illustrate important heterogeneities in minimum wage effects in urban versus rural areas." (Author's abstract, IAB-Doku, © 2023 Elsevier) ((en))

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Taylor, Garrett C. & James E. West (2023): Minimum Wage Effects Within Census Based Statistical Areas: A Matched Pair Cross-Border Analysis. (NBER working paper / National Bureau of Economic Research 31196), Cambridge, Mass, 14 S.

Abstract

"Using monthly data from major U.S. metropolitan areas that span state borders, we estimate the elasticity of employment with respect to the minimum wage using a difference-in-differences design with continuous treatment in two-digit industries of 71 (Arts, Entertainment and Recreation) and 72 (Accommodation and Food Services). In specifications that control for differences in state sales, personal and corporate income tax rates, we find negative average causal response on the treated (ACRT) in six-digit industries where we expect large numbers of young, entry-level employees, but positive correlations in other industries. Our results illustrate important heterogeneities in minimum wage effects in urban versus rural areas." (Author's abstract, IAB-Doku) ((en))

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Wursten, Jesse & Michael Reich (2023): Racial inequality in frictional labor markets: Evidence from minimum wages. In: Labour Economics, Jg. 82. DOI:10.1016/j.labeco.2023.102344

Abstract

"We provide the first causal analysis of how state and federal minimum wage policies in the U.S. have affected labor market frictions and racial wage gaps. Using stacked event studies, binned difference-in-differences estimators, within-person analyses and classic panel methods, we find that minimum wages increased wages of black workers between 16 and 64% more than among white workers and reduced the overall black-white wage gap by 10% (and by 56% among workers most affected by the policies). Racial differences in initial wages cannot explain this differential effect. Rather, minimum wages expand job opportunities for black workers more than for white workers. We present a model with labor market frictions in which minimum wages expand the job search radius of workers who do not own automobiles and who live farther from jobs. Our causal results using the ACS show that minimum wages increase commuting via automobile among black workers but not among white workers, supporting our model. Minimum wages also reduce racial gaps in separations and hires, further suggesting the policies especially enhance job opportunities for black workers." (Author's abstract, IAB-Doku, © 2023 Elsevier) ((en))

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Adams, Camilla, Jonathan Meer & CarlyWill Sloan (2022): The minimum wage and search effort. In: Economics Letters, Jg. 212. DOI:10.1016/j.econlet.2022.110288

Abstract

"Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Using event study analysis of recent minimum wage increases, we find that these changes do not affect the likelihood of searching, but do lead to transitory spikes in search effort by individuals already looking for work. These results are not driven by changes in the composition of searchers, and are concentrated among the groups most likely to be impacted by the minimum wage and in response to larger minimum wage increases." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Agarwal, Sumit, Brent W. Ambrose & Moussa Diop (2022): Minimum wage increases and eviction risk. In: Journal of Urban Economics, Jg. 129. DOI:10.1016/j.jue.2021.103421

Abstract

"We extend the debate on the benefits to increasing the minimum wage by examining the impact on expenses associated with shelter, a previously unexplored area. Our analysis uses a unique data set that tracks household rental payments. Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.7 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 10.6% fewer monthly defaults. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Berger, David W., Kyle F. Herkenhoff & Simon Mongey (2022): Minimum Wages, Efficiency and Welfare. (NBER working paper 29662), Cambridge, Mass, 84 S. DOI:10.3386/w29662

Abstract

"It has long been argued that a minimum wage could alleviate efficiency losses from monopsony power. In a general equilibrium framework that quantitatively replicates results from recent empirical studies, we find higher minimum wages can improve welfare, but most welfare gains stem from redistribution rather than efficiency. Our model features oligopsonistic labor markets with heterogeneous workers and firms and yields analytical expressions that characterize the mechanisms by which minimum wages can improve efficiency, and how these deteriorate at higher minimum wages. We provide a method to separate welfare gains into two channels: efficiency and redistribution. Under both channels and Utilitarian social welfare weights the optimal minimum wage is $15, but alternative weights can rationalize anything from $0 to $31. Under only the efficiency channel, the optimal minimum wage is narrowly around $8, robust to social welfare weights, and generates small welfare gains that recover only 2 percent of the efficiency losses from monopsony power." (Author's abstract, IAB-Doku) ((en))

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Boffy-Ramirez, Ernest (2022): Push or Pull? Measuring the labor supply response to the minimum wage using an individual-level panel. In: Applied Economics, Jg. 54, H. 35, S. 4043-4059. DOI:10.1080/00036846.2021.2020713

Abstract

"For individuals in low-wage labour markets, an increase in the minimum wage can theoretically pull them into or push them out of the labour force. If increases raise expected wages beyond reservation wages, marginal individuals could enter the labour force and begin searching for employment. If increases lower expected wages, marginal individuals already in the labour force could exit. Leveraging revised individual identifiers in the U.S. Current Population Survey, this research estimates the contemporaneous effects of minimum wage increases on labour force participation. The use of within-person variation, short individual panels, and flexible controls for time create an empirical strategy that mitigates potential biases from unobserved constant individual-level heterogeneity and time-varying factors. This research finds that minimum wage changes tend to impact the youngest individuals, but there is substantial heterogeneity in responses by age, race/ethnicity, and sex. There is stronger evidence of pull effects amongst young white men and Latinos, and weaker evidence amongst young Black women and older Latinas. Weak evidence of push effects is observed amongst younger white women, younger Latinos, and older Latinas. This research highlights heterogeneous labour force participation responses to further inform our understanding of search behaviour and labour market churn." (Author's abstract, IAB-Doku) ((en))

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Cengiz, Doruk, Arindrajit Dube, Attila S. Lindner & David Zentler-Munro (2022): Seeing Beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes. In: Journal of labor economics, Jg. 40, H. S1, S. S203-S247. DOI:10.1086/718497

Abstract

"We assess the effect of the minimum wage on labor market outcomes. First, we apply modern machine learning tools to predict who is affected by the policy. Second, we implement an event study using 172 prominent minimum wage increases between 1979 and 2019. We find a clear increase in wages of affected workers and no change in employment. Furthermore, minimum wage increases have no effect on the unemployment rate, labor force participation, or labor market transitions. Overall, these findings provide little evidence of changing search effort in response to a minimum wage increase." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2022): How Important are Minimum Wage Increases in Increasing the Wages of Minimum Wage Workers? (NBER working paper 29824), Cambridge, Mass, 39 S. DOI:10.3386/w29824

Abstract

"Popular discussion commonly presumes an outsized role for minimum wage increases as a driver of wage increases for minimum wage workers. In this paper, we investigate the accuracy of this presumption using data from the earnings studies of the Current Population Survey (CPS). CPS wage and earnings data enable us to assess the fraction of minimum wage workers who receive a raise within 12 months of their initial appearance as a minimum wage worker. On average from 2010 to 2019, we find that roughly 75 percent of minimum wage workers who remain employed experience a wage increase within 12 months. This fraction is higher during the later years of the sample, when the labor market has been strong, than in the earlier years. The fraction of minimum wage workers receiving wage increases is moderately higher when states enact minimum wage increases than when they do not. We also find that the fraction of minimum wage workers receiving wage increases is correlated with several measures of labor market tightness. Finally, wage gains are quite commonly associated with industry and/or occupation switches. This highlights the importance of career progression for the growth of earnings among entry-level workers. The vast majority of the wage gains realized by minimum wage workers thus appear to be driven by career progression and increases in labor demand. Minimum wage increases play a modest role as a driver of earnings trajectories beyond shaping the initial, typically short-lived, minimum wage job itself." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2022): Understanding "wage theft": Evasion and avoidance responses to minimum wage increases. In: Labour Economics, Jg. 79. DOI:10.1016/j.labeco.2022.102285

Abstract

"This paper presents strong evidence that minimum wage increases lead to a greater prevalence of subminimum wage payment. Using the Current Population Survey, we estimate that increases in measured underpayment following minimum wage increases average between 12 and 17 percent of realized wage gains. Our baseline analyses focus on workers ages 16 to 25, while additional analyses consider workers ages 16 to 65. In addition, we find that firms and workers comply to a far greater degree with minimum wage increases that are forecastable, modest, and regular than with minimum wage increases enacted through new legislation. We also find evidence that states' enforcement regimes influence the compliance patterns we observe. We interpret these findings as evidence that while minimum wage compliance is the norm, noncompliance is an important, economically nuanced reality in the low-wage labor market." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Clemens, Jeffrey & Michael R. Strain (2022): The Minimum Wage and Union Membership among Minimum Wage Workers: Why Do Unions Advocate for Minimum Wage Increases? (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 15685), Bonn, 10 S.

Abstract

"Over the past decade, organized labor has played a significant role in advocating for minimum wage increases. In this paper, we investigate the effects of minimum wage increases on union membership among individuals in minimum wage intensive industries. Consistent with a "freeriding" hypothesis, we find that minimum wage increases predict declines in union membership among low-skilled's most direct beneficiaries. We find no evidence of a change in union membership among high-skilled workers in these industries." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2022): Does measurement error explain the increase in subminimum wage payment following minimum wage increases? In: Economics Letters, Jg. 217. DOI:10.1016/j.econlet.2022.110638

Abstract

"In analyses of minimum wages, positive “ripple effects” and subminimum wages are difficult to distinguish from measurement error. Indeed, prior work posits that a simple, symmetric measurement error process may underlie both phenomena in Current Population Survey data for the full working age population. We show that the population-wide symmetry between spillovers and subminimum wage payment is illusory in that spillovers accrue to older individuals while subminimum wage payment accrues to the young. Symmetric measurement error cannot explain this heterogeneity, which increases the likelihood that both spillovers and subminimum-wage payment are real effects of minimum wage increases rather than artifacts of measurement error." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Hurst, Erik, Patrick J. Kehoe, Elena Pastorino & Thomas Winberry (2022): The Distributional Impact of the Minimum Wage in the Short and Long Run. (NBER working paper 30294), Cambridge, Mass, 66 S. DOI:10.3386/w30294

Abstract

"We develop a framework with rich worker heterogeneity, firm monopsony power, and putty-clay technology to study the distributional impact of the minimum wage in the short and long run. Our production technology is disciplined to be consistent with the small estimated employment effects of the minimum wage in the short run and the large estimated elasticities of substitution across inputs in the long run. We find that in the short run, a large increase in the minimum wage has a small effect on employment and therefore increases the labor income of the workers who were earning less than the new minimum wage. In the long run, however, the minimum wage has perverse distributional implications in that it reduces the employment, income, and welfare of precisely the low-income workers it is meant to help. Nonetheless, these long-run effects take time to fully materialize because firms slowly adjust their mix of inputs. Existing transfer programs, such as the earned income tax credit (EITC), are more effective at improving long-run outcomes for workers at the low end of the wage distribution. But combining existing programs with a modest increase in the minimum wage generates even larger welfare gains for low-earning workers." (Author's abstract, IAB-Doku) ((en))

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Jha, Priyaranjan, David Neumark & Antonio Rodriguez-Lopez (2022): What's across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects. (IZA discussion paper 15282), Bonn, 31 S.

Abstract

"Dube, Lester, and Reich (2010) argue that state-level minimum wage variation can be correlated with economic shocks, generating spurious evidence that higher minimum wages reduce employment. Using minimum wage variation within contiguous county pairs that share a state border, they find no relationship between minimum wages and employment in the U.S. restaurant industry. We show that this finding hinges critically on using cross-border counties to define local economic areas with which to control for economic shocks that are potentially correlated with minimum wage changes. We use, instead, multi-state commuting zones, which provide superior definitions of local economic areas. Using the same within-local area research design—but within cross-border commuting zones—we find a robust negative relationship between minimum wages and employment." (Author's abstract, IAB-Doku) ((en))

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Johnson, Matthew S. & Michael Lipsitz (2022): Why are Low-Wage Workers Signing Noncompete Agreements? In: The Journal of Human Resources, Jg. 57, H. 3, S. 689-724. DOI:10.3368/jhr.57.3.0619-10274R2

Abstract

"Policymakers are concerned by evidence that noncompete agreements (NCAs) are widely used in low-wage jobs. We show that firms that would otherwise not use NCAs are induced to use one in the presence of frictions to adjusting wages downward. Using a new survey of salon owners, we find that declines in the terms of trade for employees and increases in the minimum wage lead to higher NCA use, but only at firms for which the employee's cost of an NCA likely exceeds the employer's benefit. Furthermore, minimum wage increases have a negative effect on employment only where NCAs are unenforceable." (Author's abstract, IAB-Doku, © the Board of Regents of the University of Wisconsin System) ((en))

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Ku, Hyejin (2022): Does Minimum Wage Increase Labor Productivity? Evidence from Piece Rate Workers. In: Journal of labor economics, Jg. 40, H. 2, S. 325-359. DOI:10.1086/716347

Abstract

"We examine worker effort as a potential margin of adjustment to a minimum wage hike using unique data on piece rate workers who perform a homogenous task and whose individual output is rigorously recorded. By employing a difference-in-differences strategy that exploits the increase in Florida’s minimum wage from USD 6.79 to USD 7.21 on January 1, 2009, and worker location on the pre-2009 productivity distribution, we provide evidence consistent with incumbent workers’ positive effort responses." (Author's abstract, IAB-Doku) ((en))

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Kudlyak, Marianna, Murat Tasci & Didem Tüzemen (2022): Minimum Wage Increases and Vacancies. (IZA discussion paper 15254), Bonn, 37 S.

Abstract

"Using a unique data set and a novel identification strategy, we estimate the effect of minimum wage increases on job vacancy postings. Utilizing occupation-specific county- level vacancy data from the Conference Board's Help Wanted Online for 2005-2018, we find that state-level minimum wage increases lead to substantial declines in existing and new vacancy postings in occupations with a larger share of workers who earn close to the prevailing minimum wage. We estimate that a 10 percent increase in the state-level effective minimum wage reduces vacancies by 2.4 percent in the same quarter, and the cumulative effect is as large as 4.5 percent a year later. The negative effect on vacancies is more pronounced for occupations where workers typically have lower educational attainment (high school or less) and in counties with higher poverty rates. We argue that our focus on vacancies versus on employment has a distinct advantage of highlighting a mechanism through which minimum wage hikes affect labor demand. Our finding of a negative effect on vacancies is not inconsistent with the wide range of findings in the literature about the effect of minimum wage changes on employment, which is driven by changes in both hiring and separation margins." (Author's abstract, IAB-Doku) ((en))

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Liu, Andrew Yizhou (2022): The Minimum Wage And Occupational Mobility. In: International Economic Review, Jg. 63, H. 2, S. 917-945. DOI:10.1111/iere.12552

Abstract

"This article quantifies the effect of minimum wages on workers' occupational mobility. I show that minimum wages decrease younger, less-educated workers' occupational mobility and are associated with more mismatch. A search-and-matching model highlights two channels by which the minimum wage decreases occupational mobility. First, it compresses wages and reduces the gain from switching, leading to lower occupational mobility and more mismatch. Second, it decreases vacancy posting. Calibrating the model to the U.S. economy, the results suggest that a 15 dollar minimum wage can damp aggregate output by 0.4%, of which the wage compression channel accounts for 80%." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Manning, Alan (2022): Der flüchtige Beschäftigungseffekt des Mindestlohns. In: A. Heise & T. Pusch (Hrsg.) (2022): Mindestlöhne – Szenen einer Wissenschaft, S. 137-174.

Abstract

"Mit der Vielzahl von Papieren, die versuchen, den Effekt von Mindestlöhnen auf die Beschäftigung zu schätzen, steigt die Gefahr, den Blick auf die Frage nach dem 'Warum' zu verlieren. Insbesondere auf die Frage, warum es so schwer ist, negative Beschäftigungseffekte von Mindestlöhnen auszumachen. Vielleicht gibt es gewisse ökonomische Faktoren, die den kleinen und oftmals ambivalenten Effekt des Mindestlohns auf die Beschäftigung erklären? Oder vielleicht sind Arbeitsmärkte fundamental von anderen Märkten verschieden? Diese Anliegen sollen in diesem Beitrag diskutiert werden. Die Schlussfolgerung ist, dass der Beschäftigungseffekt des Mindestlohns schwer fassbar ist, aber auch, dass die Ökonomen hiervon nicht überrascht sein sollten, wenn man bedenkt, wie Arbeitsmärkte funktionieren, in denen Abweichungen vom vollständigen Wettbewerb viel größer sind als in vielen anderen Märkten. Tatsächlich mag es an der Zeit sein, dass die Forschung einen Schritt vorwärts macht und sich die Frage stellt, wie weit der Mindestlohn erhöht werden kann, ohne signifikante Beschäftigungseffekte auszulösen." (Textauszug, IAB-Doku)

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McHenry, Peter & Jennifer M. Mellor (2022): The Impact of Recent State and Local Minimum Wage Increases on Nursing Facility Employment. In: Journal of labor research, Jg. 43, H. 3/4, S. 345-368. DOI:10.1007/s12122-022-09338-x

Abstract

"Various U.S. states and municipalities raised their mandated minimum wages between 2017 and 2019. In some areas, minimum wages became high enough to bind for more professional workers, such as lower paid staff at nursing facilities. We add to the small prior literature on the effects of minimum wages on nursing facility staffing using novel establishment-level data on daily hours worked; these data allow us to examine changes in staffing hours along margins previously unexplored in the minimum wage literature. We find no evidence that minimum wage increases reduced hours worked among lower-paid nurses in nursing facilities. In contrast, we find that increases in state and local minimum wages increased hours worked per resident day by nursing assistants; increases occurred for the average of all days throughout the month and on weekend days. We also find that a higher minimum wage increased the share of days in the month that facilities meet at least 75% of the minimum recommended levels of staffing for nursing assistants. These results lessen concerns that minimum wage hikes may reduce the quality of resident care at nursing facilities." (Author's abstract, IAB-Doku, © Springer-Verlag) ((en))

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Neumark, David & Maysen Yen (2022): Effects of Recent Minimum Wage Policies in California and Nationwide. Results from a Pre-specified Analysis Plan. In: Industrial Relations, Jg. 61, H. 2, S. 228-255. DOI:10.1111/irel.12297

Abstract

"We analyze the impacts of recent city minimum wage increases in California and nationwide, following a pre-analysis plan (PAP) registered prior to the release of data covering two years of minimum wage increases. For California cities, we find a hint of negative employment effects. Nationally, we find some evidence of disemployment effects for teens, but not young adults or high school dropouts. City-specific analyses provide limited evidence of adverse effects on the share low-income, but the pooled city analysis does not; the national analysis generally finds no impact on the share low-income, except for reductions in the share near-poor, although that may at least partly reflect prior trends. All told, we view the results as providing neither strong evidence of substantial adverse effects of city minimum wages, nor strong evidence of substantial beneficial effects." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Neumark, David & Peter Shirley (2022): Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States? In: Industrial Relations, Jg. 61, H. 4, S. 384-417. DOI:10.1111/irel.12306

Abstract

"The disagreement among studies on the employment effects of minimum wages in the United States is well known. Less well known, and more puzzling, is the absence of agreement on what the research literature says—that is, how economists summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers. Our key conclusions are as follows: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults and the less educated; (iii) the evidence from studies of directly affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Renkin, Tobias, Claire Montialoux & Michael Siegenthaler (2022): The Pass-Through of Minimum Wages into U.S. Retail Prices: Evidence from Supermarket Scanner Data. In: The Review of Economics and Statistics, Jg. 104, H. 5, S. 890-908. DOI:10.1162/rest_a_00981

Abstract

"This paper estimates the pass-through of minimum wage increases into the prices of U.S. grocery and drug stores. We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking." (Author's abstract, IAB-Doku, © MIT Press Journals) ((en))

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Todd, Petra E. & Weilong Zhang (2022): Distributional Effects of Local Minimum Wages: A Spatial Job Search Approach. (NBER working paper 30668), Cambridge, Mass, 64 S.

Abstract

"This paper develops and estimates a spatial general equilibrium job search model to study the effects of local and universal (federal) minimum wage policies on employment, wages, job postings, vacancies, migration/commuting, and welfare. In the model, workers, who differ in terms of location and education levels, search for jobs locally and in a neighboring area. If they receive remote offers, they decide whether to migrate or commute. Firms post vacancies in multiple locations and make offers subject to minimum wage constraints. The model is estimated using multiple databases, including the American Community Survey (ACS) and Quarterly Workforce Indicators (QWI), and exploiting minimum wage variation across state borders as well as time series variation (2005-2015). Results show that local minimum wage increases lead firms to post fewer wage offers in both local and neighboring areas and lead lower education workers to reduce interstate commuting. An out-of-sample validation finds that model forecasts of commuting responses to city minimum wage hikes are similar to patterns in the data. A welfare analysis shows how minimum wage effects vary by worker type and with the minimum wage level. Low skill workers benefit from local wage increases up to $10.75/hour and high skill workers up to $12.25/hour. The greatest per capital welfare gain (including both workers and firms) is achieved by a universal minimum wage increase of $12.75/hour." (Author's abstract, IAB-Doku) ((en))

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Winters, John V. (2022): Minimum Wages and Restaurant Employment for Teens and Adults in Metropolitan and Non-metropolitan Areas. (IZA discussion paper 15499), Bonn, 38 S.

Abstract

"This study estimates effects of minimum wages on individual restaurant employment using the 2005-2019 Current Population Survey (CPS) and a two-way fixed effects regression model. I examine effects for teens and adults with less than an associate's degree for the entire U.S. and by metropolitan area status. The results indicate that minimum wages on average decrease restaurant employment for teens and increase restaurant employment for these adults, suggesting that minimum wages induce labor-labor substitution. However, this pattern is driven by metropolitan areas residents. The estimated coefficient for minimum wages on teen restaurant employment in non-metropolitan areas is not statistically significant." (Author's abstract, IAB-Doku) ((en))

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Ashenfelter, Orley & Stepán Jurajda (2021): Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald's Restaurants. (CERGE-EI working paper 684), Prag, 30 S.

Abstract

"We use highly consistent national-coverage price and wage data to provide evidence on wage increases, labor-saving technology introduction, and price pass-through by a large low-wage employer facing minimum wage hikes. Based on 2016-2020 hourly wage rates of McDonald's Basic Crew and prices of the Big Mac sandwich collected simultaneously from almost all US McDonald's restaurants, we find that in about 25% of instances of minimum wage increases, restaurants display a tendency to keep constant their wage 'premium' above the increasing minimum wage. Higher minimum wages are not associated with faster adoption of touch-screen ordering, and there is near-full price pass-through of minimum wages, with little heterogeneity related to how binding minimum wage increases are for restaurants. Minimum wage hikes lead to increases in real wages (expressed in Big Macs an hour of Basic Crew work can buy) that are one fifth lower than the corresponding increases in nominal wages." (Author's abstract, IAB-Doku) ((en))

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Bailey, Martha J., John DiNardo & Bryan A. Stuart (2021): The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act. In: Journal of labor economics, Jg. 39, H. S2, S. S329-S367. DOI:10.1086/712554

Abstract

"This paper examines the short- and longer-term economic effects of the 1966 Fair Labor Standards Act (FLSA), which increased the national minimum wage to its highest level of the twentieth century and extended coverage to an additional 9.1 million workers. Exploiting differences in the “bite” of the minimum wage owing to regional variation in the standard of living and industry composition, this paper finds that the 1966 FLSA increased wages dramatically but reduced aggregate employment only modestly. However, some evidence shows that disemployment effects were significantly larger among African American men, 40% of whom earned below the new minimum wage." (Author's abstract, IAB-Doku) ((en))

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Cengiz, Doruk, Arindrajit Dube, Attila S. Lindner & David Zentler-Munro (2021): Seeing Beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes. (NBER working paper 28399), Cambridge, MA, 60 S. DOI:10.3386/w28399

Abstract

"We assess the effect of the minimum wage on labor market outcomes such as employment, unemployment, and labor force participation for most workers affected by the policy. We apply modern machine learning tools to construct demographically-based treatment groups capturing around 75% of all minimum wage workers—a major improvement over the literature which has focused on fairly narrow subgroups where the policy has a large bite (e.g., teens). By exploiting 172 prominent minimum wages between 1979 and 2019 we find that there is a very clear increase in average wages of workers in these groups following a minimum wage increase, while there is little evidence of employment loss. Furthermore, we find no indication that minimum wage has a negative effect on the unemployment rate, on the labor force participation, or on the labor market transitions. Furthermore, we detect no employment or participation responses even for sub-groups that are likely to have a high extensive margin labor supply elasticity—such as teens, older workers, or single mothers. Overall, these findings provide little evidence for changing search effort in response to a minimum wage increase." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2021): The Heterogeneous Effects of Large and Small Minimum Wage Changes. Evidence over the Short and Medium Run Using a Pre-Analysis Plan. (NBER working paper 29264), Cambridge, Mass, 96 S. DOI:10.3386/w29264

Abstract

"This paper advances the use of pre-analysis plans in non-experimental research settings. In a study of recent minimum wage changes, we demonstrate how analyses of medium- and long-run impacts of policy interventions can be pre-specified as extensions to short-run analyses. Further, our pre-analysis plan includes comparisons of the effects of large vs. small minimum wage increases, which is a theoretically motivated dimension of heterogeneity. We discuss how these use cases harness the strengths of pre-analysis plans while mitigating their weaknesses. This project's initial analyses explored CPS and ACS data from 2011 through 2015. Alongside these analyses, we pre-committed to analyses incorporating CPS and ACS data extending through 2019. Averaging across the specifications in our pre-analysis plan, we estimate that relatively large minimum wage increases reduced employment rates among low-skilled individuals by just over 2.5 percentage points. Our estimates of the effects of relatively small minimum wage increases vary across data sets and specifications but are, on average, both economically and statistically indistinguishable from zero. We estimate that medium-run effects exceed short-run effects and that the elasticity of employment with respect to the minimum wage is substantially more negative for large minimum wage increases than for small increases." (Author's abstract, IAB-Doku) ((en))

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Derenoncourt, Ellora & Claire Montialoux (2021): Minimum Wages and Racial Inequality. In: The Quarterly Journal of Economics, Jg. 136, H. 1, S. 169-228. DOI:10.1093/qje/qjaa031

Abstract

"The earnings difference between white and black workers fell dramatically in the United States in the late 1960s and early 1970s. This article shows that the expansion of the minimum wage played a critical role in this decline. The 1966 Fair Labor Standards Act extended federal minimum wage coverage to agriculture, restaurants, nursing homes, and other services that were previously uncovered and where nearly a third of black workers were employed. We digitize over 1,000 hourly wage distributions from Bureau of Labor Statistics industry wage reports and use CPS microdata to investigate the effects of this reform on wages, employment, and racial inequality. Using a cross-industry difference-in-differences design, we show that earnings rose sharply for workers in the newly covered industries. The impact was nearly twice as large for black workers as for white workers. Within treated industries, the racial gap adjusted for observables fell from 25 log points prereform to 0 afterward. We can rule out significant disemployment effects for black workers. Using a bunching design, we find no aggregate effect of the reform on employment. The 1967 extension of the minimum wage can explain more than 20% of the reduction in the racial earnings and income gap during the civil rights era. Our findings shed new light on the dynamics of labor market inequality in the United States and suggest that minimum wage policy can play a critical role in reducing racial economic disparities." (Author's abstract, IAB-Doku) ((en))

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Dube, Arindrajit & Attila S. Lindner (2021): City Limits: What do Local-Area Minimum Wages Do? In: The Journal of Economic Perspectives, Jg. 35, H. 1, S. 27-50. DOI:10.1257/jep.35.1.27

Abstract

"Cities are increasingly setting their own minimum wages, and this trend has accelerated sharply in recent years. While in 2010 there were only three cities with their own minimum wages exceeding the state or federal standard, by 2020 there were 42. This new phenomenon raises the question: is it desirable to have city-level variation in minimum wage polices? We discuss the main trade-offs emerging from local variation in minimum wage polices and evaluate their empirical relevance. First, we document what type of cities raise minimum wages, and we discuss how these characteristics can potentially impact the effectiveness of city-level minimum wage policies. Second, we summarize the evolving evidence on city-level minimum wage changes and provide some new evidence of our own. Early evidence suggests that the impact of the policy on wages and employment to date has been broadly similar to the evidence on state- and federal-level minimum wage changes. Overall, city-level minimum wages seem to be able to tailor the policy to the local economic environment without imposing substantial distortions in allocation of labor and businesses across locations." (Author's abstract, IAB-Doku) ((en))

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Engelhardt, Gary V. & Patrick J. Purcell (2021): The minimum wage and annual earnings inequality. In: Economics Letters, Jg. 207. DOI:10.1016/j.econlet.2021.110001

Abstract

"We estimate the impact of the minimum wage on U.S. male annual earnings inequality, using administrative Social Security earnings records from 1981-2015. The minimum wage reduces inequality in the bottom quartile of the earnings distribution, and especially in the bottom decile." (Author's abstract, IAB-Doku, © 2021 Elsevier) ((en))

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Fishback, Price V. & Andrew Seltzer (2021): The Rise of American Minimum Wages, 1912-1968. In: The Journal of Economic Perspectives, Jg. 35, H. 1, S. 73-96. DOI:10.1257/jep.35.1.73

Abstract

"This paper studies the judicial, political, and intellectual battles over minimum wages from the early state laws of the 1910s through the peak in the real federal minimum in 1968. Early laws were limited to women and children and were ruled unconstitutional by the Supreme Court between 1923 and 1937. The first federal law in 1938 initially exempted large portions of the workforce and set rates that became effectively obsolete during World War II. Later amendments raised minimum rates, but coverage did not expand until 1961. The states led the way in rates and coverage in the 1940s and 50s and again since the 1980s. The most contentious questions of today—the impact of minimum wages on earnings and employment—were already being addressed by economists in the 1910s. By about 1960, these discussions had surprisingly modern concerns about causality but did not have modern econometric tools or data." (Author's abstract, IAB-Doku) ((en))

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Godoey, Anna & Michael Reich (2021): Are Minimum Wage Effects Greater in Low-Wage Areas? In: Industrial Relations, Jg. 60, H. 1, S. 36-83. DOI:10.1111/irel.12267

Abstract

"Empirical work on the minimum wage typically estimates effects averaged across high- and low-wage areas. Low-wage labor markets could potentially be less able to absorb minimum wage increases, in turn leading to more negative employment effects. In this article, we examine minimum wage effects in low-wage counties, where relative minimum wage ratios reach as high as 0.82, well beyond the state-based ratios in extant studies. Using data from the American Community Survey, the Quarterly Workforce Indicators, and the Quarterly Census on Employment and Wages, we implement event study and difference-in-differences methods, estimating average causal effects for all events in our sample and separately for areas with lower and higher impacts. We find positive wage effects, especially in high-impact counties, but do not detect adverse effects on employment, weekly hours, or annual weeks worked. We do not find negative employment effects among women, Blacks, and/or Hispanics. In high-impact counties, we find substantial declines in household and child poverty. These results inform policy debates about providing exemptions to a $15 federal minimum wage in low-wage areas." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Gopalan, Radhakrishnan, Barton Hamilton, Ankit Kalda & David Sovich (2021): State Minimum Wages, Employment, and Wage Spillovers: Evidence from Administrative Payroll Data. In: Journal of labor economics, Jg. 39, H. 3, S. 673-707. DOI:10.1086/711355

Abstract

"We use administrative payroll data to estimate the effect of the minimum wage on employment and wages. We find that both effects are nuanced. While the overall number of low-wage workers in firms declines, incumbent workers are no less likely to remain employed. We find that firms reduce employment primarily through hiring, and there is significant heterogeneity across the non-tradable and tradable sectors. For wages, we find modest spillovers extending up to $2.50 above the minimum wage. Spillovers accrue to both incumbent workers and new hires, but only within firms that employ a significant fraction of low-wage workers." (Author's abstract, IAB-Doku) ((en))

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Jha, Priyaranjan & Antonio Rodriguez-Lopez (2021): Minimum Wage and Firm Variety. (CESifo working paper 9312), München, 19 S.

Abstract

"Exploiting minimum-wage variation within multi-state commuting zones, we document a negative relationship between minimum wages and firm variety in the U.S. restaurant and retail-trade industries. To explain this finding, we construct a heterogeneous-firm model with a monopsonistic labor market and endogenous firm variety. The decentralized equilibrium underprovides the mass of firms compared to the outcome achieved by a welfare-maximizing planner. A binding minimum wage further reduces the mass of firms, exacerbating the distortion. Workers value employer variety, and thus, by reducing firm variety the minimum wage reduces workers’ welfare even if the average wage increases." (Author's abstract, IAB-Doku) ((en))

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Leung, Justin H. (2021): Minimum Wage and Real Wage Inequality: Evidence from Pass-Through to Retail Prices. In: The Review of Economics and Statistics, Jg. 103, H. 4, S. 754-769. DOI:10.1162/rest_a_00915

Abstract

"This paper considers the impact of the minimum wage on both labor and product markets using detailed store-level scanner data. I provide empirical evidence that a 10% increase in the minimum wage raises grocery store prices by 0.6% to 0.8% and suggest that the minimum wage not only raises labor costs but also affects product demand, especially in poorer regions. This points to novel channels of heterogeneity in pass-through that have distributional consequences, with key implications for real wage inequality. I also find that price rigidity within retail chains ameliorates these effects, reducing the pass-through elasticity for retail prices by about 60%." (Author's abstract, IAB-Doku, © MIT Press Journals) ((en))

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Majchrowska, Aleksandra & Pawel Strawinski (2021): Minimum wage and local employment: A spatial panel approach. In: Regional Science Policy & Practice, Jg. 13, H. 5, S. 1581-1602. DOI:10.1111/rsp3.12471

Abstract

"This study analyzes spatial dependencies in the relationship between employment and minimum wage. Local employment may be affected not only by changes relative minimum wage in a region but also by those in neighboring regions. We use the spatial Durbin model and data for 380 local Polish labor markets during 2006–2018. The results reveal significant heterogeneities in the model, showing a significant spatial relationship between local employment and the minimum-to-average-wage ratio in neighboring regions. Local minimum wage effects, insignificant at the beginning of the analyzed period, become significant and negative. These results may not be observed without a spatial model framework and are important for minimum-wage policymakers. Our results suggest that, in countries with strong differences in average wage level between regions, the minimum wage can be differentiated at the local labor market level to avoid large differences in the minimum-to-average-wage ratio." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

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Manning, Alan (2021): The elusive employment effect of the minimum wage. In: The Journal of Economic Perspectives, Jg. 35, H. 1, S. 3-26. DOI:10.1257/jep.35.1.3

Abstract

"It is hard to find a negative effect on the employment effect of rises in the minimum wage: the elusive employment effect. It is much easier to find an impact on wages. This paper argues the elusive employment effect is unlikely to be solved by better data, methodology, or specification. The reasons for the elusive employment effect are the factors contributing to why the link between higher minimum wages and higher labor costs are weaker than one might think and because imperfect competition is pervasive in the labor market." (Author's abstract, IAB-Doku) ((en))

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Neumark, David & Peter Shirley (2021): Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States? (NBER working paper 28388), Cambridge, MA, 48 S. DOI:10.3386/w28388

Abstract

"The disagreement among studies of the employment effects of minimum wages in the United States is well known. What is less well known, and more puzzling, is the absence of agreement on what the research literature says – that is, how economists even summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well-established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers. Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided." (Author's abstract, IAB-Doku) ((en))

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Neumark, David & Maysen Yen (2021): Effects of Recent Minimum Wage Policies in California and Nationwide. Results from a Pre-specified Analysis Plan. (NBER working paper 28555), Cambridge, MA, 68 S. DOI:10.3386/w28555

Abstract

"We analyze the impacts of recent city minimum wage increases in California and nationwide, following a pre-analysis plan (PAP) registered prior to the release of data covering two years of minimum wage increases. For California cities we find a hint of negative employment effects. Nationally, we find some evidence of disemployment effects for teens, but not young adults or high school dropouts. City-specific analyses provide limited evidence of adverse effects on the share low-income, but the pooled city analysis does not; the national analysis generally finds no impact on the share low-income, with one exception that may reflect prior trends." (Author's abstract, IAB-Doku) ((en))

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Ross, Jacqueline & John Welsh (2021): Understanding the "Tipped Minimum Wage": Critical Directions for US Policy Research. In: Social Policy and Society, Jg. 20, H. 2, S. 192-210. DOI:10.1017/S1474746420000214

Abstract

"With the 'gig economy' moving to the forefront of research on service labour, interest has heightened in the techniques of labour control that reproduce it. Taking tipping as just such a technique, this article explores critically the policy research around 'tipped' employment in the United States. In the United States, tipping is a legally recognised form of labour remuneration that informalises the wage relation, incentivises the worker in precarity, and internalises social relations of subordination. Understanding tipped work, its legal status, its operative logic, and the contradictions that arise within its framework, is a priority for relevant social policy analysis. The aims here are: 1) to set out the 'topography' of the policy landscape on tipping in the United States; and 2) to problematise the current scope of this policy literature in societal terms. This research will focus on the restaurant industry, but will establish its broader societal significance." (Author's abstract, IAB-Doku) ((en))

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Simon, Andrew & Matthew Wilson (2021): Optimal minimum wage setting in a federal system. In: Journal of Urban Economics, Jg. 123. DOI:10.1016/j.jue.2021.103336

Abstract

"Minimum wages in the United States are jointly set by federal, state, and local governments, while many other countries have a single national policy. This paper studies the relative merits of centralized and decentralized policy setting. A binding policy is optimal if the benefits from redistribution outweigh the costs from migration, which are relatively steeper for local governments. Centralized policy, though uniform in practice, reduces horizontal migration externalities, which improves decentralized minimum wage setting. Our results therefore indicate that decentralized and centralized policy setting exhibit strategic complementarity; the extent of which depends on mobility and regional heterogeneity. We then calibrate a model of the continental US and find that joint policy setting leads to a small welfare gain over centralization, and closely resembles the social planner's optimal policies." (Author's abstract, IAB-Doku, © 2021 Elsevier) ((en))

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Smith, Alexander A. (2021): The minimum wage and teen educational attainment. In: Labour Economics, Jg. 73. DOI:10.1016/j.labeco.2021.102061

Abstract

"Teen employment effects are central to the minimum wage debate, but important indirect effects on education receive relatively little attention. I investigate the effect of changes in the minimum wage on high school dropout decisions. Consistently across two sources of variation and three individual-level datasets, I find that increases in the minimum wage substantially reduce the dropout likelihood of low-socioeconomic status (SES) teens but have no effect on other teens." (Author's abstract, IAB-Doku, © 2022 Elsevier) ((en))

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Bailey, Martha J., John DiNardo & Bryan A. Stuart (2020): The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act. (NBER working paper 26926), Cambridge, Mass., 46 S. DOI:10.3386/w26926

Abstract

"This paper examines the short and longer-term economic effects of the 1966 Fair Labor Standards Act (FLSA) which increased the national minimum wage to its highest level of the 20th Century and extended coverage to an additional 9.1 million workers. Exploiting differences in the “bite” of the minimum wage due to regional variation in the standard of living and industry composition, this paper finds that the 1966 FLSA increased wages dramatically but reduced aggregate employment only modestly. However, the disemployment effects were significantly larger among African-American men, forty percent of whom earned below the new minimum wage in 1966." (Author's abstract, IAB-Doku) ((en))

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Cho, Heepyung & Mark Borgschulte (2020): Minimum wages and retirement. In: ILR review, Jg. 73, H. 1, S. 153-177. DOI:10.1177/0019793919845861

Abstract

"The authors study the effect of the minimum wage on the employment outcomes and Social Security claiming of older US workers from 1983 to 2016. The probability of work at or near the minimum wage increases substantially near retirement, and previous researchers and policies suggest that older workers may be particularly vulnerable to any disemployment effects of the minimum wage. Results show no evidence that the minimum wage causes earlier retirements. Instead, estimates suggest that higher minimum wages increase earnings and may have small positive effects on the labor supply of workers in the key ages of 62 to 70. Consistent with increased earnings and delayed retirement, higher minimum wages decrease the number of Social Security beneficiaries and amount of benefits disbursed. The minimum wage appears to increase financial resources for workers near retirement." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey, Lisa B. Kahn & Jonathan Meer (2020): Dropouts Need Not Apply? The Minimum Wage and Skill Upgrading. (NBER working paper 27090), Cambridge, Mass., 66 S. DOI:10.3386/w27090

Abstract

"We explore whether minimum wage increases result in substitution from lower-skilled to slightly higher-skilled labor. Using 2011-2016 American Community Survey data (ACS), we show that workers employed in low-wage occupations are older and more likely to have a high school diploma following recent statutory minimum wage increases. To better understand the role of firms, we examine the Burning Glass vacancy data. We find increases in a high school diploma requirement following minimum wage hikes, consistent with our ACS evidence on stocks of employed workers. We see substantial adjustments to requirements both within and across firms." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2020): Minimum wage analysis using a pre-committed research design. Evidence through 2018. (IZA discussion paper 13286), Bonn, 59 S.

Abstract

"This paper presents results from the fourth year of a multi-year, pre-committed research design for analyzing recent minimum wage changes. Using ACS and CPS data through 2018, we find that relatively large minimum wage increases reduced employment among low-skilled individuals by roughly 2.5 percentage points. The effects of smaller statutory increases and inflation-indexed increases vary across data sets and specifications, but are generally not distinguishable from zero. The relationship between minimum wage increases and employment is quite strongly negative in states that began enacting substantial increases between 2013 and 2015. In states that began enacting increases later in the economic expansion, estimates are more variable and tend towards zero." (Author's abstract, IAB-Doku) ((en))

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Clemens, Jeffrey & Michael R. Strain (2020): Implications of schedule irregularity as a minimum wage response margin. In: Applied Economics Letters, Jg. 27, H. 20, S. 1691-1694. DOI:10.1080/13504851.2020.1713978

Abstract

"Empirical research on minimum wages has historically focused on employment effects, with the implicit assumption that workers who remain employed under a minimum wage regime are better off. This paper develops a simple model and a stylized example to highlight the importance of an underappreciated margin: how a minimum wage might affect the regularity of workers’ schedules. Our analysis illustrates a novel line of intuition for how a minimum wage can reduce welfare even if, as in our example, it increases wages, productivity, and output, without decreasing employment." (Author's abstract, IAB-Doku) ((en))

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Dube, Arindrajit & Attila S. Lindner (2020): City Limits: What do Local-Area Minimum Wages Do? (NBER working paper 27928), Cambridge, MA, 45 S. DOI:10.3386/w27928

Abstract

"Cities are increasingly setting their own minimum wages, and this trend has accelerated sharply in recent years. While in 2010 there were only three cities with their own minimum wages exceeding the state or federal standard, by 2020 there were 42. This new phenomenon begs the question: is it desirable to have city-level variation in minimum wage polices? We discuss the main trade-offs emerging from local variation in minimum wage polices and evaluate their empirical relevance. First, we document what type of cities raise minimum wages and we discuss how these characteristics can potentially impact the effectiveness of city-level minimum wage policies. Second, we summarize the evolving evidence on city-level minimum wage changes and provide some new evidence of our own. Early evidence suggests that the impact of the policy on wages and employment to date has been broadly similar to the evidence on state and federal-level minimum wage changes. Overall, city-level minimum wages seem to be able to tailor the policy to local economic environment without imposing substantial distortions in allocation of labor and businesses across locations." (Author's abstract, IAB-Doku) ((en))

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Fishback, Price V. & Andrew Seltzer (2020): The Rise of American Minimum Wages, 1912-1968. (NBER working paper 26937), Cambridge, Mass., 34 S. DOI:10.3386/w26937

Abstract

"We describe the economic history of the rise of the American minimum wage between 1910 and 1968. Each new FLSA amendment led to a new peak in the real purchasing power of the national minimum. Exemptions to the FLSA were progressively closed and the share of workers covered finally increased from about 50 percent of the private sector workforce in 1937, to 77 percent of the private sector and 40 percent of the public sector workforce in 1966. By the late 1970s coverage was nearly complete, with only the smallest employers exempted. We describe the political economic history of the minimum wage laws, as well as the debates among economists. Another key feature is a renewed emphasis on the roles played by the states in passing the original minimum wage laws for women. The states filled some of the gaps in coverage left by the FLSA after 1938 and set higher minimum rates for women in some sectors in the 1940s and 1950s than the FLSA set for men and women in interstate commerce. Since 1981 a rising number of states have set general minimum wages that substantially exceed the national minimum." (Author's abstract, IAB-Doku) ((en))

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Kandilov, Amy M. G. & Ivan T. Kandilov (2020): The minimum wage and seasonal employment. Evidence from the US agricultural sector. In: Journal of regional science, Jg. 60, H. 4, S. 612-627. DOI:10.1111/jors.12474

Abstract

"Nearly 40% of agricultural workers in the United States earn an hourly wage that is within 10% of the prevailing state‐level minimum wage. We evaluate the impact of the minimum wage on farm employment using county‐level data from the United States Census of Agriculture. We employ long‐differences specifications and find evidence of a dynamic, negative effect of the minimum wage on seasonal agricultural employment, but no effect on year‐round agricultural employment. We estimate a long‐run elasticity of total agricultural employment with respect to the minimum wage of about −0.40, which is both statistically and economically significant. Employers’ total expenditures on hired agricultural workers are not affected by the minimum wage. Finally, our analysis suggests that increases in minimum wages may lead to higher capital investment as well as the consolidation of farming operations in the agricultural sector." (Author's abstract, IAB-Doku, © 2020 Policy Press) ((en))

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Lavecchia, Adam M. (2020): Minimum wage policy with optimal taxes and unemployment. In: Journal of Public Economics, Jg. 190. DOI:10.1016/j.jpubeco.2020.104228

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Munguía Corella, Luis F. (2020): Minimum wages in monopsonistic labor markets. (SocArXiv Papers), 43 S. DOI:10.31235/osf.io/abpj9

Abstract

"Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the U.S. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, none of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this paper, I estimate the effects of the minimum wage under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment between -0.333 and -2.3 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity between 0.07 and 0.18. The minimum wage has a positive effect between 0.69 and 0.90 under full monopsonistic labor markets. The results are consistent among different specifications and controlling for possible endogeneity and external shocks to the HHI." (Author's abstract, IAB-Doku) ((en))

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Pérez Pérez, Jorge (2020): City Minimum Wages and Spatial Equilibrium Effects. (SocArXiv papers), 73 S. DOI:10.31235/osf.io/fpx9e

Abstract

"Local minimum wage laws are becoming common across U.S. cities, and their effects may be different from the effects of state or national minimum wage policies. This paper studies the effect of changes in the minimum wage on spatial equilibriums in local labor markets. Using residence and workplace data for the United States, I analyze how commuting, residence, and employment locations change across city and state borders if the minimum wage changes on one side of the border. I find that areas in which the minimum wage increases receive fewer low-wage commuters. A 10 percent increase in the minimum wage reduces the inflow of low-wage commuters by about 2.5 percent. Rises in the minimum wage are also associated with employment relocation across borders toward areas that did not witness an increase in the minimum wage. I formulate a spatial equilibrium gravity model to explain the distribution of workers between low- and high-minimum wage areas. I calculate counterfactual equilibriums with a higher minimum wage for U.S. counties with cities considering an increase, highlighting the role of commuting and migration responses. About two-fifths of the counties considering increases would receive fewer low-wage commuters. Employment relocation away from high-minimum wage areas drives the commuting losses." (Author's abstract, IAB-Doku) ((en))

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Roth, Duncan (2020): Nichteinhaltung des Mindestlohns in Deutschland. Stellungnahme des IAB zur öffentlichen Anhörung des Ausschusses für Arbeit, Gesundheit und Soziales im Landtag Nordrhein-Westfalen am 9.9.2020. (IAB-Stellungnahme 07/2020), Nürnberg, 11 S.

Abstract

"Seit dem 1. Januar 2015 gilt in Deutschland ein einheitlicher gesetzlicher Mindestlohn. Zwar belegen Forschungsergebnisse einen positiven Effekt auf Löhne am unteren Ende der Lohnverteilung, der mit der Einführung des Mindestlohns einhergeht. Dieser Befund bedeutet jedoch nicht, dass es keine Unterschreitung des Mindestlohns gibt. Wie viele Personen unterhalb der Mindestlohngrenze bezahlt werden, ist bisher nicht abschließend geklärt worden. Die Einschätzungen zu dieser Frage reichen von etwa 483.000 Personen im Jahr 2018 bis zu 2,4 Millionen Personen. In dieser Stellungnahme werden die Schwierigkeiten beschrieben, das Ausmaß der Nichteinhaltung mit den vorliegenden Datensätzen abzuschätzen. Für eine bessere Einordnung werden darüber hinaus entsprechende Einschätzungen zur Mindestlohnunterschreitung aus anderen Ländern zusammengefasst. Abschließend werden aktuelle Erkenntnisse zur Frage beschrieben, inwiefern die Aufzeichnungspflicht dazu beiträgt, das Ausmaß der Nichteinhaltung zu reduzieren." (Autorenreferat, IAB-Doku)

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Azar, José, Emiliano Huet-Vaughn, Ioana Marinescu, Bledi Taska & Till von Wachter (2019): Minimum wage employment effects and labor market concentration. (NBER working paper 26101), Cambrige, Mass., 40 S. DOI:10.3386/w26101

Abstract

"Why is the employment effect of the minimum wage frequently found to be close to zero? Theory tells us that when wages are below marginal productivity, as with monopsony, employers are able to increase wages without laying off workers, but systematic evidence directly supporting this explanation is lacking. In this paper, we provide empirical support for the monopsony explanation by studying a key low-wage retail sector and using data on labor market concentration that covers the entirety of the United States with fine spatial variation at the occupation-level. We find that more concentrated labor markets - where wages are more likely to be below marginal productivity - experience significantly more positive employment effects from the minimum wage. While increases in the minimum wage are found to significantly decrease employment of workers in low concentration markets, minimum wage-induced employment changes become less negative as labor concentration increases, and are even estimated to be positive in the most highly concentrated markets. Our findings provide direct empirical evidence supporting the monopsony model as an explanation for the near-zero minimum wage employment effect documented in prior work. They suggest the aggregate minimum wage employment effects estimated thus far in the literature may mask heterogeneity across different levels of labor market concentration." (Author's abstract, IAB-Doku) ((en))

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Boffy-Ramirez, Ernest (2019): The short-run effects of the minimum wage on employment and labor market participation. Evidence from an individual-level panel. (IZA discussion paper 12137), Bonn, 43 S.

Abstract

"Neumark, Salas, and Wascher (2014) succinctly summarize the empirical challenges researchers of the minimum wage face: 'the identification of minimum wage effects requires both a sufficiently sharp focus on potentially affected workers and the construction of a valid counterfactual control group for what would have happened absent increases in the minimum wage.' The difficulty of addressing these two challenges is evident in the variety of empirical approaches seen in the literature. In this paper, I address the latter of the issues in a manner nearly absent in the minimum wage literature by taking advantage of individual-level longitudinal data to observe the impacts of minimum wage changes on unemployment and labor force participation. Using within-individual variation and short 4-month panels, I control for heterogeneity at the individual level that determines unemployment and labor force participation. Specifically, the empirical strategy controls any fixed individual-specific idiosyncrasies and differential exposure to time-invariant economic shocks. This differs significantly from previous literature that exploits within-state variation. The short-run impacts of the minimum wage are assessed using monthly data, instead of yearly or quarterly data, which allows for the analysis of contemporaneous minimum wage effects. There is no evidence of an increase in unemployment immediately following a minimum wage increase. In addition, it does not appear that employers are substituting full-time workers with part-time workers. That said, there is robust evidence that immediately following a minimum wage increase, labor force participation decreases." (Author's abstract, IAB-Doku) ((en))

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Brown, Charles C. & Daniel S. Hamermesh (2019): Wages and hours laws: What do we know? What can be done? (IZA discussion paper 12410), Bonn, 32 S.

Abstract

"We summarize recent research on the wage and employment effects of minimum wage laws in the U.S. and infer from non-U.S. studies of hours laws the likely effects of unchanging U.S. hours laws. Minimum wages in the U.S. have increasingly become a province of state governments, with the effective minimum wage now closely related to a state's wage near the lower end of its wage distribution. Original estimates demonstrate how the 45-year failure to increase the exempt earnings level for salaried workers under U.S. hours laws has raised hours of lower-earning salaried workers and reduced their weekly earnings. The overall conclusion from the literature and the original work is that wages and hours laws in the U.S. have produced impacts in the directions predicted by economic theory, but that these effects have been quite small." (Author's abstract, IAB-Doku) ((en))

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Cengiz, Doruk, Arindrajit Dube, Attila Lindner & Ben Zipperer (2019): The effect of minimum wages on low-wage jobs. In: The Quarterly Journal of Economics, Jg. 134, H. 3, S. 1405-1454. DOI:10.1093/qje/qjz014

Abstract

"We estimate the effect of minimum wages on low-wage jobs using 138 prominent state-level minimum wage changes between 1979 and 2016 in the United States using a difference-in-differences approach. We first estimate the effect of the minimum wage increase on employment changes by wage bins throughout the hourly wage distribution. We then focus on the bottom part of the wage distribution and compare the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it to infer the employment effect. We find that the overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages. However, we do find some evidence of reduced employment in tradeable sectors. We also show how decomposing the overall employment effect by wage bins allows a transparent way of assessing the plausibility of estimates." (Author's abstract, IAB-Doku) ((en))

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Chava, Sudheer, Alexander Oettl & Manpreet Singh (2019): Does a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses? (NBER working paper 26523), Cambridge, Mass., 68 S. DOI:10.3386/w26523

Abstract

"Do increases in federal minimum wage impact the financial health of small businesses? Using intertemporal variation in whether a state’s minimum wage is bound by the federal rate and credit-score data for approximately 15.2 million establishments for the period 1989–2013, we find that increases in the federal minimum wage worsen the financial health of small businesses in the affected states. Small, young, labor-intensive, minimum-wage sensitive establishments located in the states bound to the federal minimum wage and those located in competitive and low-income areas experience higher financial stress. Increases in the minimum wage also lead to lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate for small businesses. The results are robust to using nearest-neighbor matching and geographic regression discontinuity design. Our results document some potential costs of a one-size-fits-all nationwide minimum wage, and we highlight how it can have an adverse effect on the financial health of some small businesses." (Author's abstract, IAB-Doku) ((en))

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Churchill, Brandyn F. & Joseph J. Sabia (2019): The effects of minimum wages on low-skilled immigrants' wages, employment, and poverty. In: Industrial relations, Jg. 58, H. 2, S. 275-314. DOI:10.1111/irel.12232

Abstract

"Raising the minimum wage has been advanced as complementary policy to comprehensive immigration reform to improve low-skilled immigrants' economic well-being. While adverse labor demand effects could undermine this goal, existing studies do not detect evidence of negative employment effects. We re-investigate this question using data from the 1994 to 2016 Current Population Survey and conclude that minimum wage increases reduced employment of less-educated Hispanic immigrants, with estimated elasticities of around - 0.1. However, we also ?nd that the wage and employment effects of minimum wages on low-skilled immigrants diminished over the last decade. This ?nding is consistent with more restrictive state immigration policies and the Great Recession inducing outmigration of low-skilled immigrants, as well as immigrants moving into the informal sector. Finally, our results show that raising the minimum wage is an ineffective policy tool for reducing poverty among immigrants." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Cooper, Daniel, María José Luengo-Prado & Jonathan A. Parker (2019): The local aggregate effects of minimum wage increases. (NBER working paper 25761), Cambrige, Mass., 59 S. DOI:10.3386/w25761

Abstract

"Using variation in minimum wages across cities and controlling for differences in business-cycle factors and long-run local economic trends, we find that following minimum wage increases, both prices and nominal spending rise modestly. These gains are larger for certain sub-categories of goods such as food away from home and in locations where low-wage workers are a larger share of employment. Further, minimum wage increases are associated with reduced total debt among households with low credit scores, higher auto debt, and increased access to credit." (Author's abstract, IAB-Doku) ((en))

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Dube, Arindrajit (2019): Minimum wages and the distribution of family incomes. In: American Economic Journal. Applied Economics, Jg. 11, H. 4, S. 268-304. DOI:10.1257/app.20170085

Abstract

"There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution. The long-run (3 or more years) minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between -0.220 and -0.459 across alternative specifications. The long-run minimum wage elasticities for the tenth and fifteenth unconditional quantiles of family income range between 0.152 and 0.430 depending on specification. A reduction in public assistance partly offsets these income gains, which are on average 66 percent as large when using an expanded income definition including tax credits and noncash transfers." (Author's abstract, IAB-Doku) ((en))

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Fan, Maoyong & Anita Alves Pena (2019): Do minimum wage laws affect those who are not covered? Evidence from agricultural and non-agricultural workers. In: PLoS ONE, Jg. 14, H. 10. DOI:10.1371/journal.pone.0221935

Abstract

"Some employers are not obligated to pay at least minimum wages to all employees. U.S. farm employers comprise one of these groups. Employees of large farms and H-2A workers (lawfully admitted, nonimmigrant workers performing temporary or seasonal agricultural work) are protected by minimum wage legislation, while some migrant workers (often those paid piece rates) are exempt. U.S. agriculture also is characterized by a large percentage of unauthorized workers who may or may not earn above minimum wage. Following insights from dual labor market theory and from theories of the signaling capacity of the minimum wage, we compare labor market outcomes in the agricultural sector (where minimum wage coverage is limited) to low wage/skill non-agricultural sectors (where minimum wage coverage is more complete) nationally using data from the Current Population Survey. We then extend our analysis to a detailed state-level case study of agricultural workers in California using a representative survey of employed farm workers. Results suggest wage increases for covered workers that exceed those for uncovered workers, but insignificant differences in hours worked. This is the first study to our knowledge to examine the impacts of minimum wage coverage on agricultural workers relative to other workers for the U.S." (Author's abstract, IAB-Doku) ((en))

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Fone, Zachary S., Joseph J. Sabia & Resul Cesur (2019): Do minimum wage increases reduce crime? (NBER working paper 25647), Cambrige, Mass., 78 S. DOI:10.3386/w25647

Abstract

"An April 2016 Council of Economic Advisers (CEA) report advocated raising the minimum wage to deter crime. This recommendation rests on the assumption that minimum wage hikes increase the returns to legitimate labor market work while generating minimal adverse employment effects. This study comprehensively assesses the impact of minimum wages on crime using data from the 1998-2016 Uniform Crime Reports (UCR), National Incident-Based Reporting System (NIBRS), and National Longitudinal Study of Youth (NLSY). Our results provide no evidence that minimum wage increases reduce crime. Instead, we find that raising the minimum wage increases property crime arrests among those ages 16-to-24, with an estimated elasticity of 0.2. This result is strongest in counties with over 100,000 residents and persists when we use longitudinal data to isolate workers for whom minimum wages bind. Our estimates suggest that a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion." (Author's abstract, IAB-Doku) ((en))

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Godøy, Anna, Michael Reich & Sylvia A. Allegretto (2019): Parental labor supply: Evidence from minimum wage changes. (IRLE working paper 2019-103), Berkeley, CA, 61 S.

Abstract

"Declining labor force participation rates among less-educated individuals in the U.S. have been attributed to various causes, including skill-biased technical change, demand shocks induced by international competition, looser eligibility requirements for disability insurance, the opioid epidemic and the nature of child care and family leave policies. In this paper, we examine how the labor supply of parents of dependent children respond to minimum wage changes. We implement an event study framework and document a sharp rise in employment and earnings of parents after state minimum wage increases. We further show that these effects are concentrated among jobs that pay the minimum wage or slightly higher - high wage employment remains unaffected. Panel models find corresponding drops in welfare receipts, moreover, for single mothers, effects are larger for mothers of preschool age children. The results are consistentwith a simple labor supply model in which means-tested transfers and fixed costs of work in the form of paid childcare create barriers to labor market entry for parents of dependent children. Minimum wage increases then enable higher rates of parental labor force participation, resulting in significant reductions in child poverty. We find no evidence of employment crowd-out among non-parents, suggesting potential overall welfare gains from higher minimum wages." (Author's abstract, IAB-Doku) ((en))

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Godøy, Anna & Michael Reich (2019): Minimum wage effects in low-wage areas. (IRLE working paper 2019-106), Berkeley, CA, 48 S.

Abstract

"A proposal to raise the federal minimum wage to $15 by 2024 would increase the relative minimum wage - the ratio to the national median wage - to about .68. In Alabama and Mississippi, our two lowest-wage states, the relative minimum wage would rise to .77 and .85, respectively. Yet research on state-level minimum wage policies does not extend beyond $10; the highest studied state-level relative minimum wage is .59. To close this gap we study minimum wage effects in counties and PUMAs where relative minimum wage ratios already reach as high as .82. Using ACS data since 2005 and 51 events, we sort counties and PUMAs according to their relative minimum wages and bites. We report average results for all the events in our sample, and separately for those with lower and higher impacts. We find positive wage effects but do not detect adverse effects on employment, weekly hours or annual weeks worked. We do not find negative employment effects among women, blacks and/or Hispanics. We do find substantial declines in household and child poverty." (Author's abstract, IAB-Doku) ((en))

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Lennon, Conor, Jose Fernandez, Stephan Gohmann & Keith Teltser (2019): Minimum wages, morality, and efficiency: A choice experiment. In: AEA papers and proceedings, Jg. 109, S. 176-181. DOI:10.1257/pandp.20191088

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Luca, Dara Lee & Michael Luca (2019): Survival of the fittest: The impact of the minimum wage on firm exit. (NBER working paper 25806), Cambrige, Mass., 43 S. DOI:10.3386/w25806

Abstract

"We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. We find that the impact of the minimum wage depends on whether a restaurant was already close to the margin of exit. Restaurants with lower ratings are closer to the margin of exit on average, and are disproportionately driven out of business by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 10 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating on Yelp), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale). We expand the analysis to look at prices using data from delivery orders, and find that lower rated restaurants also increase prices in response to minimum wage increases. Our analysis also highlights how digital data can be used to shed new light on labor policy and the economy." (Author's abstract, IAB-Doku) ((en))

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Monras, Joan (2019): Minimum wages and spatial equilibrium. Theory and evidence. In: Journal of labor economics, Jg. 37, H. 3, S. 853-904. DOI:10.1086/702650

Abstract

"This paper introduces a spatial equilibrium model that relates earnings, employment, and internal migration responses to minimum wage increases. Population moves to or away from regions that increase minimum wages depending on the labor demand elasticity and on the financing of unemployment benefits. The empirical evidence shows that increases in minimum wages lead to increases in wages and decreases in employment among the low skilled. The labor demand elasticity is estimated to be around 1, which in the model is in line with the migration responses observed in the data. Low-skilled workers tend to leave regions that increase minimum wages." (Author's abstract, IAB-Doku) ((en))

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Nadler, Carl, Sylvia A. Allegretto, Anna Godøy & Michael Reich (2019): Are local minimum wages too high? (IRLE working paper 2019-102), Berkeley, CA, 109 S.

Abstract

"We measure the effects of six citywide minimum wages that ranged up to $13 in Chicago, the District of Columbia, Oakland, San Francisco, San Jose and Seattle, employing event study and synthetic control methods. Using aggregate data on average earnings and employment in the food services industry, we find significantly positive earnings increases and no significant employment losses. While such evidence suggests the policies raised the earnings of low-wage workers, as intended, a competing explanation is that the industry responds to wage increases by increasing their demand for more productive higher-wage workers, offsetting low-wage layoffs (i.e., labor-labor substitution). To tackle this key question, we present a theoretical framework that connects the responses estimated at the industry-level to the own- and cross-wage labor demand elasticities that summarize the total effect of the policies on workers. Using a calibration exercise, we find that the combination of average earnings gains and constant employment cannot be produced by labor-labor substitution unless there are also effects on hours. To test whether the minimum wage increases demand for higher-wage workers or reduces low-wage workers' hours, we examine the effects of California's recent state and local minimum wage policies on the food services industry. There we find no evidence of labor-labor substitution or hours responses. Thus, the most likely explanation for the responses we find in the cities is that the industry's demand for low-wage workers is inelastic, and the policies raised their earnings." (Author's abstract, IAB-Doku) ((en))

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Neumark, David (2019): The econometrics and economics of the employment effects of minimum wages. Getting from known unknowns to known knowns. In: German economic review, Jg. 20, H. 3, S. 293-329. DOI:10.1111/geer.12184

Abstract

"I discuss the econometrics and the economics of past research on the effects of minimum wages on employment in the United States. My intent is to try to identify key questions raised in the recent literature, and some from the earlier literature, which I think hold the most promise for understanding the conflicting evidence and arriving at a more definitive answer about the employment effects of minimum wages. My secondary goal is to discuss how we can narrow the range of uncertainty about the likely effects of the large minimum wage increases becoming more prevalent in the United States. I discuss some insights from both theory and past evidence that may be informative about the effects of high minimum wages, and try to emphasize what research can be done now and in the near future to provide useful evidence to policy-makers on the results of the coming high minimum wage experiment, whether in the United States or in other countries." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Neumark, David & Cortnie Shupe (2019): Declining teen employment: minimum wages, returns to schooling, and immigration. In: Labour economics, Jg. 59, H. August, S. 49-68. DOI:10.1016/j.labeco.2019.03.008

Abstract

"We explore the decline in teen employment in the United States since 2000, which was sharpest for 16-17 year-olds. We consider three main explanatory factors: a rising minimum wage that could reduce employment opportunities for teens and potentially increase the value of investing in schooling; rising returns to schooling; and increasing competition from immigrants that, like the minimum wage, could reduce employment opportunities and possibly also raise the returns to human capital investment. We find that, among these factors, higher minimum wages are the predominant factor explaining changes in the schooling and workforce behavior of 16-17 year-olds since 2000. The employment decline arises from a combination of a lower likelihood of being both employed and enrolled in school, and a higher likelihood of being enrolled in school only (not employed). These effects are consistent with the minimum wage leading students to increase their focus on schooling to meet a higher productivity standard for jobs with a higher minimum wage." (Author's abstract, © 2019 Elsevier) ((en))

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Phelan, Brian J. (2019): Hedonic-based labor supply substitution and the ripple effect of minimum wages. In: Journal of labor economics, Jg. 37, H. 3, S. 905-947. DOI:10.1086/702651

Abstract

"This paper analyzes a new explanation of the 'ripple effect' of minimum wages based on how minimum wages affect hedonic compensation. Minimum wage hikes lower compensating differentials at low-skill undesirable jobs because they raise wages at the most desirable low-skill job, the minimum wage job. This change in hedonic compensation may cause some individuals to optimally leave low-wage undesirable jobs and seek more desirable employment. If labor supply falls at low-wage undesirable jobs, employers would raise wages, consistent with the ripple effect. Empirically, I provide evidence that hedonic-based labor supply substitution is taking place and contributing to the ripple effect." (Author's abstract, IAB-Doku) ((en))

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Snyder, Thomas, Senayt Rinkevich & Weici Yuan (2019): Do minimum wage increases affect SNAP benefits? In: The B.E. Journal of Economic Analysis and Policy, Jg. 19, H. 2, S. 1-6. DOI:10.1515/bejeap-2018-0045

Abstract

"The recession of the late 2000s accompanied a steep increase in the number of people on the U.S. federal Supplemental Nutrition Assistance Program (SNAP). The economy recovered, yet the number of people on SNAP remained relatively high. This study investigates whether increases in minimum wages affected the number of SNAP beneficiaries and the per-capita cost of the program. Economic reasoning suggests a minimum wage increase can decrease poverty through higher wages or increase poverty by enacting a barrier to work. Using a panel data set (1997 - 2015) at the state level, two-way fixed effects estimates demonstrate a nonlinear relationship between minimum wages and SNAP benefits. At low minimum wages, increases in the minimum wage reduce SNAP enrollment and benefits; however, at high minimum wages, increases in the minimum wage increase SNAP enrollment and benefits. Twenty states have already passed the minimum wage turning point. Further increases can lead to more SNAP participants." (Author's abstract, © De Gruyter) ((en))

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Wang, Wuyi, Peter C. B. Phillips & Liangjun Su (2019): The heterogeneous effects of the minimum wage on employment across states. In: Economics Letters, Jg. 174, H. January, S. 179-185. DOI:10.1016/j.econlet.2018.11.002

Abstract

"This paper studies the relationship between the minimum wage and the employment rate in the US using the framework of a panel structure model. The approach allows the minimum wage, along with some other controls, to have heterogeneous effects on employment across states which are classified into a group structure. The effects on employment are the same within each group but differ across different groups. The number of groups and the group membership of each state are both unknown a priori. The approach employs the C-Lasso technique, a recently developed classification method that consistently estimates group structure and leads to oracle-efficient estimation of the coefficients. Empirical application of C-Lasso to a US restaurant industry panel over the period 1990-2006 leads to the identification of four separate groups at the state level. The findings reveal substantial heterogeneity in the impact of the minimum wage on employment across groups, with both positive and negative effects and geographical patterns manifesting in the data. The results provide some new perspectives on the prolonged debate on the impact of minimum wage on employment." (Author's abstract, © 2018 Elsevier) ((en))

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Wolfson, Paul & Dale Belman (2019): 15 years of research on US employment and the minimum wage. In: Labour, Jg. 33, H. 4, S. 488-506. DOI:10.1111/labr.12162

Abstract

"Statistical analysis of the minimum wage and employment has been very active for the last quarter century, including more than 37 studies of US data since the December 2000 AER exchange involving Card, Krueger, Neumark and Wascher. In this meta-analysis of the 37 that report results suitable for this technique, the most important finding is a considerable shift toward the origin in the 'consensus range': from the interval [-0.3, -0.1] to [-0.13, -0.07]. The minimum wage has negative employment effects, but these have become notably smaller and are largely localized to teenagers." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Yuen, C. Y. Kelvin & Ping Wang (2019): Minimum wage in a Multi-Tier search and wage-posting model with cross-market substitutions. (NBER working paper 26378), Cambrige, Mass., 57 S. DOI:10.3386/w26378

Abstract

"While minimum wage policy is widely adopted in the real world, can it effectively raise the average wage of lower paid jobs without having large detrimental consequences for employment? The empirical literature fails to establish robust findings. We develop a general-equilibrium search and wage-posting framework with heterogeneous workers and tasks matching in multi-tier labor markets: abstract, routine high-skilled, routine middle-skilled, manual middle-skilled and manual low-skilled. We incorporate rich cross-market spillovers and compositional effects from individual responses to market thickness. As a result of minimum wage hikes, we show that (i) the unemployment rate at the minimum wage binding market is higher, while all other markets enjoy a lower unemployment rate; (ii) employment in the manual low-skilled jobs is lower, whereas employment in the routine high-skilled and manual middle-skilled markets is higher due to cross-market substitutions; and, (iii) employment in other markets has ambiguous responses due to conflicting effects on potential worker entry and unemployment. By calibrating the model to fit the U.S. data, we evaluate the impacts of the federal minimum wage hike (2007-2009) and the on-going minimum wage increase in Seattle (2017-2021). We find that the minimum wage effects on employment on the binding markets depend crucially on the magnitudes of spillover and compositional effects and that the employment effects may be weak in a nonbinding market. Moreover, our results suggest that, while both minimum wage hikes reduce aggregate output, they only generate small effects on submarket average and overall average wages." (Author's abstract, IAB-Doku) ((en))

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Aaronson, Daniel, Eric French, Isaac Sorkin & Ted To (2018): Industry dynamics and the minimum wage: A putty-clay approach. In: International Economic Review, Jg. 59, H. 1, S. 51-84. DOI:10.1111/iere.12262

Abstract

"We document two new findings about the industry-level response to minimum wage hikes. First, restaurant exit and entry both rise following a hike. Second, there is no change in employment among continuing restaurants. We develop a model of industry dynamics based on putty-clay technology that is consistent with these findings. In the model, continuing restaurants cannot change employment, and thus industry-level adjustment occurs gradually through exit of labor-intensive restaurants and entry of capital-intensive restaurants. Interestingly, the putty-clay model matches the small estimated short-run disemployment effect of the minimum wage found in other studies, but produces a larger long-run disemployment effect." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Adams, Camilla, Jonathan Meer & CarlyWill Sloan (2018): The minimum wage and search effort. (NBER working paper 25128), Cambrige, Mass., 36 S. DOI:10.3386/w25128

Abstract

"Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Yet there is no empirical evidence on this crucial assumption. Using event study analysis of recent minimum wage increases, we find that increases to minimum wage do not increase the likelihood of searching, but do lead to large yet very transitory spikes in search effort by individuals already looking for work. The results are not driven by changes in the composition of searchers." (Author's abstract, IAB-Doku) ((en))

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Allegretto, Sylvia & Michael Reich (2018): Are local minimum wages absorbed by price increases? Estimates from internet-based restaurant menus. In: ILR review, Jg. 71, H. 1, S. 35-63. DOI:10.1177/0019793917713735

Abstract

"The authors analyze 884 Internet-based restaurant menus from inside and outside San Jose, California, which they collected before and after the city implemented a 25% minimum wage increase in 2013. Their findings suggest that nearly all of the cost increase was passed through to consumers, as prices rose 1.45% on average. Minimum wage price elasticities averaged 0.058 for all restaurants and ranged from 0.044 to 0.109, depending on the type of restaurant. The authors' estimate of payroll cost increases net of turnover savings is consistent with these findings. Equally important, border effects for restaurants are smaller than is often conjectured. Price differences among restaurants that are one-half mile from either side of the policy border are not competed away, indicating that restaurant demand is spatially inelastic. These results imply that citywide minimum wage policies need not result in substantive negative employment effects nor shifts of economic activity to nearby areas." (Author's abstract, IAB-Doku) ((en))

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Bauducco, Sofía & Alexandre Janiak (2018): The macroeconomic consequences of raising the minimum wage: capital accumulation, employment and the wage distribution. In: European Economic Review, Jg. 101, H. January, S. 57-76. DOI:10.1016/j.euroecorev.2017.09.012

Abstract

"We study the quantitative impact of a rise in the minimum wage on macroeconomic outcomes such as employment, the stock of capital and the distribution of wages. Our modeling framework is the large-firm search and matching model. Our comparative statics are in line with previous empirical findings: a moderate increase in the minimum wage barely affects employment, while it compresses the wage distribution and generates positive spillovers on higher wages. The model also predicts an increase in the stock of capital. Next, we perform the policy experiment of introducing a 10 dollar minimum wage. Our results suggest large positive effects on capital (4.0%) and output (1.8%), with a decrease in employment by 2.8%. The introduction of a 9 dollar minimum wage would instead produce similar effects on capital accumulation without harming employment." (Author's abstract, © 2017 Elsevier) ((en))

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Brunt, Christopher S. & Anthony G. Barilla (2018): An evaluation of the relationship between minimum wage and unemployment. Does the local cost-of-living matter? In: Applied Economics Letters, Jg. 25, H. 7, S. 493-498. DOI:10.1080/13504851.2017.1340562

Abstract

"This article examines the relationship between federal, state and municipal minimum wage laws, local cost-of-living (COL) and the unemployment rate. It finds a strong statistically significant positive relationship between minimum wages and unemployment once COL is taken into account. Our results suggest that federal minimum wage policy is likely to have more harmful effects in rural/low cost areas." (Author's abstract, IAB-Doku) ((en))

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Cebula, Richard J. & Gigi M. Alexander (2018): Is there an impact of labor market freedom on the elderly female labor force participation rate in the U.S.? An exploratory study. In: Economics Bulletin, Jg. 38, H. 1, S. 30-40.

Abstract

"This exploratory empirical study investigates the hypothesis that greater labor market freedom should elevate the female labor force participation rate of women age 65 years and older. Strong and consistent empirical support for this hypothesis is provided in this study. For example, a one unit increase in the labor market freedom index appears to induce a 5.3%-6.88% increase in the female labor force participation rate of women age 65 years and older." (Author's abstract, IAB-Doku) ((en))