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 nontradable and trad-able 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.
|Number of pages||35|
|Journal||Journal of Labor Economics|
|State||Published - Jul 2021|
Bibliographical notePublisher Copyright:
© 2021 by The University of Chicago. All rights reserved.
ASJC Scopus subject areas
- Industrial relations
- Economics and Econometrics