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Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment

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  • John J. Horton

Abstract

Firms posting job openings in an online labor market were randomly assigned minimum hourly wages. When facing a minimum wage, fewer firms hired, but those they did hire paid higher wages. Hours-worked fell substantially. Treated firms shifted to hiring more productive workers. Using the platform's imposition of a market-wide minimum wage after the experiment, I find that many of the experimental results also hold in equilibrium, including the substitution towards more productive workers. However, there was also a large reduction in the number of jobs posted for which the minimum wage would likely bind.

Suggested Citation

  • John J. Horton, 2025. "Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment," American Economic Review, American Economic Association, vol. 115(1), pages 117-146, January.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:1:p:117-46
    DOI: 10.1257/aer.20170637
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    Cited by:

    1. Clemens, Jeffrey & Strain, Michael R., 2025. "The Heterogeneous Effects of Large and Small Minimum Wage Changes on Hours Worked: Evidence Using a Partially Pre-Committed Analysis Plan," IZA Discussion Papers 17913, Institute of Labor Economics (IZA).
    2. Hayato Kanayama & Sho Miyaji & Suguru Otani, 2025. "Who Bears the Cost? High-Frequency Evidence on Minimum Wage Effects and Amenity Pass-Through in Spot Labor Markets," Papers 2505.04555, arXiv.org, revised May 2025.

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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