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My new @nberpubs WP w/ Attila Lindner, Doruk Cengiz & @ben_zipperer uses 138 #minimumwage changes and estimates an *overall* impact on low-wage jobs.
TL;DR: little effect on jobs from US min wage hikes to date; sizable wage effects incl spillovers.
https://www.nber.org/papers/w25434.pdf …
1/.pic.twitter.com/cehMp6zD8y
Basic idea behind the "bunching" approach is simple. Compare the "missing jobs" below the new minimum wage to the "excess jobs" at or just above the minimum to infer effect on jobs. Use dif-in-dif w/ states not raising the minimum wage to construct counterfactual. 2/.pic.twitter.com/2xUkd6WaMZ
Going up to 5 years after wage change, we find: (1) a clear reduction in jobs paying below the new minimum but (2) equal sized number of jobs paying at or slightly above. Implies small overall employment change. Also little effect on "upper tail" -> validation of design 3/.pic.twitter.com/SyaqXFyyjJ
We consider changes up to 5 years following policy. These minimum wage increases were persistent (shown by time path of missing jobs); and employment changes remain small over the horizon. 4/.pic.twitter.com/oOhkTeqLc2
These estimates are highly robust to a variety of ways of forming counterfactuals, including allowing for trends, allowing for regional heterogeneity, etc. 5/.
Besides *overall* effect on low-wage jobs, we look at subgroups, esp lower-credentialed workers & under-represented minorities. Groups w/ more "missing jobs below" (bigger bite) also had similarly bigger "excess jobs above" -> little indication of labor-labor substitution. 6/.pic.twitter.com/kvnWy9ynIV
We also consider heterogeneity by sector. We find a sizable (but imprecise) negative employment effect in tradable sector (manufacturing) but small/positive effects elsewhere. Since most minimum wage workers today are not in tradable sector, explains small overall effect. 7/.
Another interesting finding: most of the wage spillovers are driven by incumbent workers. Not much evidence of spillovers for those newly entering the labor force. Consistent with spillovers reflecting internal firm-level relative pay concerns. 8/.pic.twitter.com/BGT3YmqvxB
Besides an average effect, we estimate each of these event-specific estimates separately. Distribution of these estimates -> min wages were clearly binding in most places, but distribution of employment effects (& stat. sig. counts) consistent w/ sharp null of 0 everywhere. 9/.pic.twitter.com/EALMk4jfPo
Also assess if jobs effects more negative when the minimum wage is more binding (higher minimum-to-median ratio, or Kaitz index). Little evidence of this going up to 59% of median wage. Suggests US minimum wages yet to reach a point where there is substantial job losses. 10/.pic.twitter.com/YncUBS3wO7
Lots of other things in the paper, incl: * using demographic based low-skilled group instead of (or in addition to) using a wage-distribution based approach * assessment of the size and nature of wage spillovers * use of upper tail falsification test to assess specifications 11/.
Don't let the apparent length of the paper deter you! Length driven mostly by detailed Online Appendices for those interested in specific issues. Main paper (including tables/figures) is around 40 pages. 12/12
Addendum: Part of our motivation in estimating an *overall* impact of MW on low wage jobs is that this is something policymakers care a lot about, but existing research is quite limited. In 2014, the CBO had to basically make one up using estimates for teens!pic.twitter.com/nqHeQO3EYg
Addendum 2: Here is a short (2 page) research brief explaining the key approach and findings of the paper.https://www.dropbox.com/s/m42bwe6omlcvkiv/Research%20Brief%20CDLZ.pdf?dl=0 …
I didn't see this when browsing through the data, but did you account for say the effect on larger companies versus small local shops? I saw the per sector results, but didn't see this when I glanced through.
We don't specifically break down by firm size in this paper, but do provide evidence by sector, types of workers, size of the minimum wage, etc.
I did see sector type, but I would think a breakdown by firm size might also be useful since it's likely if there was any kind of impact it would be on the firms who are working with a much smaller resource pool. IE a Walmart is likely to be less affected than a corner store.
Agreed. Future work!
very hard for me to digest even the first sentence in the abstract!
Here is a 2 page research brief that hopefully (!) is more accessible:https://www.dropbox.com/s/m42bwe6omlcvkiv/Research%20Brief%20CDLZ.pdf?dl=0 …
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