Worker Earnings, Service Quality, and Firm Profitability: Evidence from Nursing Homes and Minimum Wage Reforms

Review of Economics and Statistics, Forthcoming

Posted: 21 Apr 2021 Last revised: 3 Oct 2022

See all articles by Krista Ruffini

Krista Ruffini

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

Date Written: October 1, 2022

Abstract

This paper examines whether higher earnings for frontline workers affects the quality of employees' output. I leverage increases in the statutory minimum wage, combined with worker, consumer, and firm outcomes in the nursing home sector. I find that higher minimum wages increase income and retention among low-wage employees and improve consumer outcomes, measured by fewer inspection violations; lower rates of adverse, preventable health conditions; and lower resident mortality. Firms maintain profitability by attracting consumers with a greater ability to pay and increasing prices for these individuals.

Keywords: Minimum wage, nursing homes, efficiency wage, worker performance

JEL Classification: J08, J38, I18, I38

Suggested Citation

Ruffini, Krista, Worker Earnings, Service Quality, and Firm Profitability: Evidence from Nursing Homes and Minimum Wage Reforms (October 1, 2022). Review of Economics and Statistics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3830657 or http://dx.doi.org/10.2139/ssrn.3830657

Krista Ruffini (Contact Author)

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

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Georgetown University ( email )

Washington, DC 20057
United States

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