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Seeing beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes

Author

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  • Doruk Cengiz
  • Arindrajit Dube
  • Attila Lindner
  • David Zentler-Munro

Abstract

We assess the effect of the minimum wage on labor market outcomes. First, we apply modern machine learning tools to predict who is affected by the policy. Second, we implement an event study using 172 prominent minimum wage increases between 1979 and 2019. We find a clear increase in wages of affected workers and no change in employment. Furthermore, minimum wage increases have no effect on the unemployment rate, labor force participation, or labor market transitions. Overall, these findings provide little evidence of changing search effort in response to a minimum wage increase.

Suggested Citation

  • Doruk Cengiz & Arindrajit Dube & Attila Lindner & David Zentler-Munro, 2022. "Seeing beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 203-247.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/718497
    DOI: 10.1086/718497
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    Cited by:

    1. Lalive, Rafael & Card, David & Colella, Fabrizio, 2021. "Gender Preferences in Job Vacancies and Workplace Gender Diversity," CEPR Discussion Papers 16619, C.E.P.R. Discussion Papers.
    2. Sebastian Fossati & Joseph Marchand, 2024. "First to $15: Alberta’s Minimum Wage Policy on Employment by Wages, Ages, and Places," ILR Review, Cornell University, ILR School, vol. 77(1), pages 119-142, January.
    3. Mattozzi, Andrea & Nocito, Samuel & Sobbrio, Francesco, 2022. "Fact-checking Politicians," CEPR Discussion Papers 17710, C.E.P.R. Discussion Papers.
    4. Paul Clarke & Annalivia Polselli, 2023. "Double Machine Learning for Static Panel Models with Fixed Effects," Papers 2312.08174, arXiv.org, revised Dec 2023.
    5. Jiménez, Bruno & Rendon, Silvio, 2022. "Labor Market Effects of Bounds on Domestic Outsourcing," IZA Discussion Papers 15692, Institute of Labor Economics (IZA).
    6. Gordon Burtch & Edward McFowland III & Mochen Yang & Gediminas Adomavicius, 2023. "EnsembleIV: Creating Instrumental Variables from Ensemble Learners for Robust Statistical Inference," Papers 2303.02820, arXiv.org.
    7. Taeyoung Doh & Kyoo il Kim & Sungil Kim & Hwanoong Lee & Kyungho Song, 2022. "The Economic Effects of a Rapid Increase in the Minimum Wage: Evidence from South Korea Experiments," Research Working Paper RWP 22-13, Federal Reserve Bank of Kansas City.
    8. Bassier, Ihsaan, 2022. "Collective bargaining and spillovers in local labor markets," LSE Research Online Documents on Economics 118057, London School of Economics and Political Science, LSE Library.
    9. Ihsaan Bassier, 2022. "Collective bargaining and spillovers in local labor markets," CEP Discussion Papers dp1895, Centre for Economic Performance, LSE.

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