Spillover Effects from Voluntary Employer Minimum Wages

117 Pages Posted: 1 Mar 2021 Last revised: 7 Jun 2022

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; Harvard Kennedy School Ash Institute for Democracy

Date Written: February 28, 2021

Abstract

IMPORTANT UPDATE: Low unionization rates, a falling real federal minimum wage, and outsourcing have hampered wage growth in the low-wage sector in the US. In recent years, a number of private employers have opted to institute or raise company-wide mini- mum 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 broader labor market effects of these policies? In this paper, we study recent minimum wages by Amazon, Walmart, Target, CVS, and Costco using data from millions of online job ads; employee surveys; and the CPS.

Although the following version of this paper presents evidence that these policies induced wage increases at low-wage jobs at other employers, where the modal response was to match the wage announced by the large retailer, we have discovered a fundamental issue with the methodology used to measure basic spillover impacts. This methodology as well as associated robustness checks used in the paper, which emulated approaches in the larger literature in measuring minimum wage and related impacts, leads to estimated effects that arise from the statistical
mean reversion. When we apply a series of placebo and related tests and simulations using revised spillover treatment effect estimators, detailed in Appendix A, we do not find evidence of the spillover effects described in the following paper. A revised paper with a full discussion of the problems of the original approach and new results regarding revised estimates of spillover effects is forthcoming.

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

Harvard Kennedy School Ash Institute for Democracy ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
283
Abstract Views
14,718
rank
158,011
PlumX Metrics