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State Minimum Wages, Employment, and Wage Spillovers: Evidence from Administrative Payroll Data

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  • Radhakrishnan Gopalan
  • Barton H. Hamilton
  • Ankit Kalda
  • David Sovich

Abstract

We use administrative payroll data to estimate the effect of the minimum wage on employment and wages. We find that both effects are nuanced. While the overall number of low-wage workers in firms declines, incumbent workers are no less likely to remain employed. We find that firms reduce employment primarily through hiring, and there is significant heterogeneity across the nontradable and tradable sectors. For wages, we find modest spillovers extending up to $2.50 above the minimum wage. Spillovers accrue to both incumbent workers and new hires, but only within firms that employ a significant fraction of low-wage workers.

Suggested Citation

  • Radhakrishnan Gopalan & Barton H. Hamilton & Ankit Kalda & David Sovich, 2021. "State Minimum Wages, Employment, and Wage Spillovers: Evidence from Administrative Payroll Data," Journal of Labor Economics, University of Chicago Press, vol. 39(3), pages 673-707.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/711355
    DOI: 10.1086/711355
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