THE SHORT‐RUN EMPLOYMENT EFFECTS OF RECENT MINIMUM WAGE CHANGES: EVIDENCE FROM THE AMERICAN COMMUNITY SURVEY

This paper presents early evidence on the employment effects of state minimum wage increases enacted between January 2013 and January 2015. As of 2015, we estimate that relatively large minimum wage increases (defined as those exceeding $1) reduced employment among low‐skilled population groups by just over 1 percentage point. Smaller minimum wage increases, as well as increases linked to inflation indexation provisions, appear to have had much smaller (and possibly positive) effects on employment over our sample period. The estimates thus raise the potential importance of nonlinearities in the minimum wage's effects, which are consistent with standard models of the labor market. (JEL H11, J08, J23)     

Is there a labor shortage?

Business Economics - A panel discusses ongoing and prospective developments in the US labor market. Michael Horrigan points out that job losses in the COVID recession were heavily concentrated...     

Economists tackle the challenges of a pandemic

Business Economics - The COVID-19 pandemic radically and rapidly changed the world, including the world of business economists. Eight NABE members employed in a wide variety of fields discuss how...     

Cost Structure and Performance of Prairie Grain and Oilseed Farms

The views expressed in this paper are those of the authors and do not necessarily represent the views of Agriculture Canada     

American Enterprise Institute Roundtable: Was Milton Friedman Right about Shareholder Capitalism?*

In this look back at Milton Friedman's famous essay in The New York Times 50 years ago organized by the American Enterprise Institute, three well‐known panelists discussed whether executives should continue to be guided by Friedman's oft‐cited statement that the “social responsibility of business is to increase its own profits.” One pretext or prompt for this discussion is the Business Roundtable's recent rethinking of the corporate mission, with its emphasis on all corporate stakeholders, employees and local communities as well as shareholders. Among the panelists, Marty Lipton takes the most enthusiastic view of this alternative to shareholder primacy. Now often identified as “stakeholder capitalism,” this alternative is embraced by Lipton as part of a “New Paradigm” in which large, universal owners act more or less in concert to pressure private companies to play a greater role in protecting the environment and lifting people out of poverty. By contrast, fund manager Cliff Asness and former Bush advisor and Columbia Business School dean Glenn Hubbard find considerable relevance and resilience in the old shareholder paradigm. Hubbard, for example, emphasizes the impossibility of maximizing long‐run value in highly competitive product and labor markets without taking care of all important stakeholders. And while sympathetic to the intent of the Business Roundtable—and the value of ensuring enough investment in corporate stakeholders—both Hubbard and Asness are troubled by the prospect of a corporate governance system trying to hold corporate managers accountable in a stakeholder‐centric world.     

Do volatile firms pay volatile earnings? Evidence from linked worker-firm data

Despite the importance of earnings instability, little is known about its correlates or causes. This article seeks to better understand earnings instability by studying whether volatile firms pay volatile earnings and is the first to directly test the relationship using US linked employer–employee data. The article finds a positive and statistically significant relationship using within-firm variation. In addition, this article finds that lower earning workers are passed significantly more volatility from their employing firms than are higher earning workers.     

High school experiences,the gender wage gap,and the selection of occupation

Using within-high-school variation and controlling for a measure of cognitive ability, this article finds that high-school leadership experiences explain a significant portion of the residual gender wage gap and selection into management occupations. Our results imply that high-school leadership could build non-cognitive, productive skills that are rewarded years later in the labour market and that explain a portion of the systematic difference in pay between men and women. Alternatively, high-school leadership could be a proxy variable for personality characteristics that differ between men and women and that drive higher pay and becoming a manager. Because high-school leadership experiences are exogenous to direct labour market experiences, our results leave less room for direct labour market discrimination as a driver of the gender wage gap and occupation selection.     

How important are minimum wage increases in increasing the wages of minimum wage workers?

Popular discussion presumes minimum wage increases primarily drive wage gains for minimum wage workers. We investigate this presumption using the Current Population Survey to assess the fraction of minimum wage workers receiving raises after 12 months. This fraction is moderately higher following state minimum wage increases, and positively correlated with several measures of labor market tightness. Finally, wage gains frequently follow industry and/or occupation switches, highlighting the importance of career progression for earnings growth among entry-level workers. Career progression and increases in labor demand rather than minimum wage increases appear to drive most wage gains for minimum wage workers.