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Minimum Wage Increases and Vacancies

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  • Marianna Kudlyak
  • Murat Tasci
  • Didem Tuzemen

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.

Suggested Citation

  • Marianna Kudlyak & Murat Tasci & Didem Tuzemen, 2020. "Minimum Wage Increases and Vacancies," Research Working Paper RWP 20-22, Federal Reserve Bank of Kansas City.
  • Handle: RePEc:fip:fedkrw:89534
    DOI: 10.18651/RWP2020-22
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    More about this item

    Keywords

    Minimum Wage; Vacancies; Hiring; Search and Matching;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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