Spillover Effects from Voluntary Employer Minimum Wages

53 Pages Posted: 1 Nov 2021 Last revised: 27 May 2023

See all articles by Ellora Derenoncourt

Ellora Derenoncourt

Princeton University

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

Bledi Taska

Emsi Burning Glass

Date Written: October 2021

Abstract

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 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 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 on minimum wage effects, leads to estimated effects that arise from 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.

Suggested Citation

Derenoncourt, Ellora and Noelke, Clemens and Weil, David and Taska, Bledi, Spillover Effects from Voluntary Employer Minimum Wages (October 2021). NBER Working Paper No. w29425, Available at SSRN: https://ssrn.com/abstract=3953952

Ellora Derenoncourt (Contact Author)

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
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

Bledi Taska

Emsi Burning Glass ( email )

66 Long Wharf, Floor 2
Boston, MA 02110

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