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Minimum Wage, Employment, and Margins of Adjustment: Evidence from Employer–Employee Matched Panel Data

Author

Listed:
  • Jungmin Lee
  • Geumbi Park

Abstract

We decompose the employment effect of the minimum wage into changes in employment within continued establishments and changes due to the exits of establishments. For small-sized establishments, we distinguish between other labor adjustment margins, such as hours worked, hiring, and separation at the individual level. Using employer–employee matched panel data, we show that the magnitude and channels of the employment effect differ by establishment size and industry. We find a negative effect of the minimum wage on employment growth, which is highly concentrated among small establishments. In particular, in the food and lodging and manufacturing industries, a substantial part of the effect is driven by business closing.

Suggested Citation

  • Jungmin Lee & Geumbi Park, 2026. "Minimum Wage, Employment, and Margins of Adjustment: Evidence from Employer–Employee Matched Panel Data," Journal of Human Resources, University of Wisconsin Press, vol. 61(1), pages 211-239.
    • Handle: RePEc:uwp:jhriss:v:61:y:2026:i:1:p:211-239
    Note: DOI: https://doi.org/10.3368/jhr.0820-11082R3
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    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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