Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment

78 Pages Posted: 24 Jul 2017

See all articles by John J. Horton

John J. Horton

New York University (NYU) - Department of Information, Operations, and Management Sciences

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Date Written: July 04, 2017

Abstract

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

Horton, John J., Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment (July 04, 2017). CESifo Working Paper Series No. 6548, Available at SSRN: https://ssrn.com/abstract=3005890

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