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Does Regional Variation in Wage Levels Identify the Effects of a National Minimum Wage?

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  • Daniel Haanwinckel

Abstract

This paper uses theory and extensive simulations to study two approaches that use regional wage differences to identify the effects of a national minimum wage: effective-minimum-wage designs, which measure exposure using contemporaneous local wages, and fraction-affected/ gap designs, which measure exposure before reform. I show that these designs can be unreliable in many plausible settings. A Brazilian case study shows that employment and wage-inequality estimates vary sharply across specifications, providing a plausible explanation for conflicting findings in the existing Brazilian literature. The paper concludes with practical recommendations for applied researchers and discusses how similar concerns may arise in other settings.

Suggested Citation

  • Daniel Haanwinckel, 2026. "Does Regional Variation in Wage Levels Identify the Effects of a National Minimum Wage?," NBER Working Papers 35298, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35298
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    2. Rui Costa & Olivia Masi & Beatriz Ribeiro & Matteo Sandi, 2026. "Sentencing severity, victim behaviour, and the prevention of domestic violence," CEP Discussion Papers dp2177, Centre for Economic Performance, LSE.

    More about this item

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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