Non-Employment Effects of the Minimum Wage
Paper Session
Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)
- Chair: R. Jisung Park, University of Pennsylvania
Effects of California’s $20 Fast Food Minimum Wage
Abstract
We provide the first study of the effects of a minimum wage increase from $16 to $20 in April 2024 that covered over 500,000 California fast food workers. California had already doubled its state minimum wage—to $16 between 2013 and 2024, but in much smaller annual increments. As Wiltshire, MacPherson, Reich and Sosinskiy (2024) established, those policies significantly increased wages but did not create negative employment effects. Our outcome measures include prices, wages, employment, store closures and price to wage ratios. We utilize both difference-in-differences and synthetic control methods to identify the causal effects of the $20 policy. Our data come from the CES and the QCEW and novel store-level price data for fast food restaurants.Company Wage Policy in a Low-Wage Labor Market
Abstract
We study how firms set wages for their employees when they can legally age-discriminate across workers. We exploit an age-specific minimum wage change in the UK, which raised the minimum applying to workers aged 25 and over, leaving unchanged the minima for younger workers. Using matched employer-employee data on a low-paying sector, we show large, positive wage spillovers on workers aged under 25, which arise within firms from company wage policy. Pay equity norms offer the most plausible explanation for the emergence of spillovers. The effects that we document also operate in other low-paying sectors of the UK labor market.Do Minimum Wage Increases Change the Non-Wage Value of Work? Evidence from Glassdoor
Abstract
In theory, binding minimum wage increases may lead employers to offset new wage costs by reducing their provision of non-wage job amenities in order to keep the value of the job positive for both parties while retaining employees. Empirically, we have little evidence of adjustment along non-wage margins, in particular non-pecuniary ones. This study harnesses standardized measures of job satisfaction, wage, and non-wage amenities available across millions of workers over the last decade collected by Glassdoor, a job review website. We analyze how workers' reviews change in response to minimum wage hikes.Search Effort and the Minimum Wage
Abstract
I assess the impact of the minimum wage on the search effort of the unemployed. Using machine learning methods, and leveraging the richness of the American Time Use Survey (ATUS) together with the large sample size of the Current Population Survey (CPS), I build measures of search effort and exposure to the minimum wage for unemployed workers. I exploit state-level minimum wage variation in the US over the last decades in a stacked-event study design to examine whether the highly exposed unemployed change their search effort in response to the policy. I find that an increase in the minimum wage leads to higher search effort. Yet, the individuals increasing effort do not find jobs faster. Interpreting the estimates through the lens of a standard DMP model with search effort, I find that the observed effort increase should have raised employment ceteris paribus. However, market tightness declines in equilibrium so that the return per unit of effort in terms of job finding gets reduced, ultimately leading to an overall null employment effect. Moreover, this setup allows me to investigate the welfare impact of the policy in a transparent way, revealing that the minimum wage increases welfare for exposed individuals.Discussant(s)
Damian Vergara
,
Princeton
Aaron Sojourner
,
WE Upjohn Institute
Virginia Minni
,
University of Chicago
Felix Koenig
,
Carnegie Mellon University
Justin Bloesch
,
Cornell University
JEL Classifications
- J3 - Wages, Compensation, and Labor Costs
- J8 - Labor Standards: National and International