The Review of Economics and Statistics Vol. 106 No. 6 2024
Worker Earnings, Service Quality, and Firm Profitability: Evidence from Nursing Homes and Minimum Wage Reforms
Abstract
This paper examines whether higher earnings for frontline workers affects the quality of employees’ output. I leverage increases in the statutory minimum wage, combined with worker, consumer, and firm outcomes in the nursing home sector. I find that higher minimum wages increase income and retention among low-wage employees and improve consumer outcomes, measured by fewer inspection violations; lower rates of adverse, preventable health conditions; and lower resident mortality. Firms maintain profitability by attracting consumers with a greater ability to pay and increasing prices for these individuals.
- DOI
- 10.1162/rest_a_01271
- Volume
- 106
- Issue
- 6
- Pages
- 1477-1494
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref