The Heterogeneous Effects of Large and Small Minimum Wage Changes on Hours Worked: Evidence Using a Partially Pre-Committed Analysis Plan

Abstract

In a study of recent minimum wage changes (Clemens and Strain, forthcoming), we demonstrate how analyses of longer-run impacts of policy interventions can be pre-specified as extensions to very short-run analyses. This paper uses this novel methodology to study the effects of minimum wage increases on hours worked. Analyzing CPS and ACS data with the empirical specifications from our partially pre-committed analysis plan, we estimate that relatively large minimum wage increases reduced usual hours worked per week among individuals with low levels of experience and education by just under one hour per week during the decade prior to the onset of the Covid-19 pandemic. Our estimates of the effects of relatively small minimum wage increases vary across data sets and specifications but are, on average, both economically and statistically indistinguishable from zero. We estimate that the elasticity of hours worked with respect to the minimum wage is substantially more negative for large minimum wage increases than for small increases.

Keywords: minimum wages, hours worked, pre-commitment

JEL Classification: J08, J23, J38