Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment
78 Pages Posted: 24 Jul 2017
Date Written: July 04, 2017
Minimum hourly wages were randomly imposed on firms posting job openings in an online labor market. A higher minimum wage raised the wages of hired workers substantially. However, there was some reduction in hiring and large reductions in hours-worked. Treated firms hired more productive workers, which can explain, in part, the reduction in hours-worked: with more productive workers, projects were completed in less time. At the conclusion of the experiment, the platform imposed a market-wide minimum wage. A difference-in-differences analysis shows that, in equilibrium, firms still substitute towards more productive workers, adversely affecting less productive workers.
Keywords: minimum wages, field experiments, hiring
JEL Classification: J010, J080
Suggested Citation: Suggested Citation