Spillover Effects from Voluntary Employer Minimum Wages

74 Pages Posted: 1 Mar 2021 Last revised: 9 Mar 2021

See all articles by Ellora Derenoncourt

Ellora Derenoncourt

University of California, Berkeley - Department of Economics; University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Clemens Noelke

Brandeis University - The Heller School for Social Policy and Management

David Weil

Brandeis University - The Heller School for Social Policy and Management

Date Written: February 28, 2021

Abstract

Low unionization rates, a falling real federal minimum wage, and prevalent non-competes characterize low-wage jobs in the United States and contribute to growing inequality. In recent years, a number of private employers have opted to institute or raise company-wide minimum wages for their employees, sometimes in response to public pressure. To what extent do wage-setting changes at major employers spill over to other employers, and what are the labor market effects of these policies? In this paper, we study recent minimum wages by Amazon, Walmart, Target, and Costco using data from millions of online job ads and employee surveys. We document that these policies induced wage increases at low-wage jobs at other employers. In the case of Amazon, which instituted a $15 minimum wage in October 2018, our estimates imply that a 10% increase in Amazon's advertised hourly wages led to an average increase of 2.6% among other employers in the same commuting zone. Using the CPS, we estimate wage increases in exposed jobs in line with our magnitudes from employee surveys and find that major employer minimum wage policies led to small but precisely estimated declines in employment, with employment elasticities ranging from -.04 to -.13.

Keywords: Minimum wage, spillover effects, monopsony, oligopsony, labor markets

JEL Classification: J08, J31, J38, J42

Suggested Citation

Derenoncourt, Ellora and Noelke, Clemens and Weil, David, Spillover Effects from Voluntary Employer Minimum Wages (February 28, 2021). Available at SSRN: https://ssrn.com/abstract=3793677 or http://dx.doi.org/10.2139/ssrn.3793677

Ellora Derenoncourt (Contact Author)

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Clemens Noelke

Brandeis University - The Heller School for Social Policy and Management ( email )

P.O. Box 549110/MS 035
415 South Street
Waltham, MA 02454
United States

David Weil

Brandeis University - The Heller School for Social Policy and Management ( email )

P.O. Box 549110/MS 035
415 South Street
Waltham, MA 02454
United States

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