Minimum Wage Increases and Vacancies

38 Pages Posted: 22 Apr 2022

See all articles by Marianna Kudlyak

Marianna Kudlyak

Federal Reserve Bank of San Francisco; Hoover Institution; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Murat Tasci

Federal Reserve Bank of Cleveland

Didem Tuzemen

Federal Reserve Bank of Kansas City

Multiple version iconThere are 3 versions of this paper

Date Written: April 21, 2022

Abstract

Using a unique data set and a novel identification strategy we explore the effect of the state-level minimum wage increases on firms' existing and new vacancy postings. Utilizing occupation-specific county-level vacancy data from the Conference Board's Help Wanted Online for 2005-2018, we show that the state-level minimum wage increases lead to substantial declines in existing and new vacancy postings for occupations with a larger share of workers earning around the prevailing minimum wage. Our estimate implies that a 10 percent increase in the binding minimum wage reduces vacancies by 2.4 percent contemporaneously, and could be as large as 4.5 percent a year later. The negative effect on vacancies is more pronounced for occupations where workers generally have lower educational attainment (high school or less) and those in counties with higher poverty rates.

Keywords: Minimum Wage; Vacancies; Hiring; Search and Matching

JEL Classification: E24, E32, J30, J41, J63, J64

Suggested Citation

Kudlyak, Marianna and Tasci, Murat and Tuzemen, Didem, Minimum Wage Increases and Vacancies (April 21, 2022). FRB of Cleveland Working Paper No. 19-30R, Available at SSRN: https://ssrn.com/abstract=4089901 or http://dx.doi.org/10.2139/ssrn.4089901

Marianna Kudlyak

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Hoover Institution ( email )

Stanford, CA 94305
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Murat Tasci (Contact Author)

Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Didem Tuzemen

Federal Reserve Bank of Kansas City

1 Memorial Dr.
Kansas City, MO 64198
United States

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