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State Minimum Wages, Employment, and Wage Spillovers: Evidence from Administrative Payroll Data

Radhakrishnan Gopalan¹; Barton H. Hamilton¹; Ankit Kalda²; David Sovich³

¹ Washington University in St. Louis · ² Indiana University · ³ University of Kentucky

We use administrative payroll data to estimate the effect of the minimum wage on employment and wages. We find that both effects are nuanced. While the overall number of low-wage workers in firms declines, incumbent workers are no less likely to remain employed. We find that firms reduce employment primarily through hiring, and there is significant heterogeneity across the nontradable and tradable sectors. For wages, we find modest spillovers extending up to $2.50 above the minimum wage. Spillovers accrue to both incumbent workers and new hires, but only within firms that employ a significant fraction of low-wage workers.

DOI

10.1086/711355

Volume

39 (3)

Pages

673-707

Language

en

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