State Minimum Wages, Employment, and Wage Spillovers: Evidence From Administrative Payroll Data
88 Pages Posted: 5 May 2017 Last revised: 12 Nov 2019
Date Written: July 1, 2018
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 that significant heterogeneity exists 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.
Keywords: Minimum Wage, Labor Economics, Employment, Income
JEL Classification: J01, J23, J38, H11
Suggested Citation: Suggested Citation