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 proprietary, county-level vacancy data from the Conference Board’s Help Wanted Online to analyze the effects of minimum wage increases on the quantity of labor demanded. 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 2005–18 period led to substantial declines in vacancy postings in 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.

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

JEL Classification: E24; E32; J21; J24; J62;

https://doi.org/10.18651/RWP2020-22

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 2020-12-30

Number: RWP 20-22