Working Paper

Minimum Wage Increases and Vacancies


Abstract: We estimate the impact of minimum-wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use propriety, county-level vacancy data from the Conference Board’s Help Wanted Online database. Our identification relies on the disproportionate effects of minimum-wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum-wage increases during the 2005-2018 period have led to substantial declines in vacancy postings in at-risk occupations, occupations with a larger share of employment around the prevailing minimum wage. Our estimate implies that a 10 percent increase in the binding minimum- wage level reduces vacancies by 2.4 percent in this group. The negative effect is concentrated not exclusively in the routine jobs, but more in the manual occupations.

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

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

https://doi.org/10.26509/frbc-wp-201930

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Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers

Publication Date: 2019-12-23

Number: 201930