Minimum Wages and Racial Discrimination in Hiring: Evidence from a Field Experiment

92 Pages Posted: 29 Nov 2023

See all articles by Alec Brandon

Alec Brandon

Johns Hopkins University

Justin Holz

University of Chicago, Harris School of Public Policy, Students; University of Chicago

Andrew Simon

University of Chicago; Australian National University (ANU) - Research School of Economics

Haruka Uchida

University of Chicago, Department of Economics, Students

Date Written: November 9, 2023

Abstract

When minimum wages increase, employers may respond to the regulatory burdens by substituting away from disadvantaged workers. We test this hypothesis using a correspondence study with 35,000 applications around ex-ante uncertain minimum wage increases in three U.S. states. Before the increases, applicants with distinctively Black names were 19 percent less likely to receive a callback than equivalent applicants with distinctively white names. Announcements of minimum wage hikes substantially reduce callbacks for all applicants but shrink the racial callback gap by 80 percent. Racial inequality decreases because firms disproportionately reduce callbacks to lower-quality white applicants who benefited from discrimination under lower minimum wages.

Keywords: minimum wage, correspondence study, racial discrimination

JEL Classification: J23, C93, J71, J15

Suggested Citation

Brandon, Alec and Holz, Justin and Holz, Justin and Simon, Andrew and Uchida, Haruka, Minimum Wages and Racial Discrimination in Hiring: Evidence from a Field Experiment (November 9, 2023). Available at SSRN: https://ssrn.com/abstract=4628410 or http://dx.doi.org/10.2139/ssrn.4628410

Alec Brandon

Johns Hopkins University ( email )

Baltimore, MD 20036-1984
United States

Justin Holz

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

University of Chicago, Harris School of Public Policy, Students ( email )

Chicago, IL
United States

Andrew Simon (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Australian National University (ANU) - Research School of Economics ( email )

Canberra
Australia

Haruka Uchida

University of Chicago, Department of Economics, Students ( email )

Chicago, IL
United States

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