Minimum Wage Shocks, Employment Flows, and Labor Market Frictions

2016/04/28 by Arindrajit Dubé, T. William Lester, Michael Reich · 3 citations
Economics, Econometrics and Finance · Health Professions · #Labor market dynamics and wage inequality #Firm Innovation and Growth #Employment and Welfare Studies

paper · doi:10.1086/685449

openalex publication_date 2016/04/28 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/27

Abstract

We provide the first estimates of the effects of minimum wages on employment flows in the US labor market, identifying the impact by using policy discontinuities at state borders. We find that minimum wages have a sizable negative effect on employment flows but not on stocks. Separations and accessions fall among affected workers, especially those with low tenure. We do not find changes in the duration of nonemployment for separations or hires. This evidence is consistent with search models with endogenous separations.

Citations

• Wage Differentials, Employer Size, and Unemployment
• Inference with “Difference in Differences” with a Small Number of Policy Changes
• Robust Inference With Multiway Clustering
• Revisiting the Minimum Wage—Employment Debate: Throwing Out the Baby with the Bathwater?

Cited by

• The Elusive Employment Effect of the Minimum Wage
• When is tinkering with safety net programs harmful to beneficiaries?
• Minimum wage [wikipedia]

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