State Minimum Wages, Employment, and Wage Spillovers: Evidence From Administrative Payroll Data

State Minimum Wages, Employment, and Wage Spillovers: Evidence From Administrative Payroll Data (Mar 1, 2020). Journal of Labor Economics, Forthcoming

98 Pages Posted: 5 May 2017 Last revised: 14 Apr 2020

See all articles by Radhakrishnan Gopalan

Radhakrishnan Gopalan

Washington University in St. Louis - John M. Olin Business School

Barton H. Hamilton

Washington University, Saint Louis - John M. Olin School of Business

Ankit Kalda

Indiana University - Kelley School of Business - Department of Finance

David Sovich

University of Kentucky - Gatton College of Business and Economics

Date Written: Mar 1, 2020

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.

Keywords: Minimum Wage, Labor Economics, Employment, Income

JEL Classification: J01, J23, J38, H11

Suggested Citation

Gopalan, Radhakrishnan and Hamilton, Barton H. and Kalda, Ankit and Sovich, David, State Minimum Wages, Employment, and Wage Spillovers: Evidence From Administrative Payroll Data (Mar 1, 2020). State Minimum Wages, Employment, and Wage Spillovers: Evidence From Administrative Payroll Data (Mar 1, 2020). Journal of Labor Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2963083 or http://dx.doi.org/10.2139/ssrn.2963083

Radhakrishnan Gopalan

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Barton H. Hamilton

Washington University, Saint Louis - John M. Olin School of Business ( email )

One Brookings Drive, Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-8057 (Phone)
314-935-6359 (Fax)

HOME PAGE: http://www.olin.wustl.edu/faculty/hamiltonb/

Ankit Kalda

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

David Sovich (Contact Author)

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

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