Minimum Wage Increases and Vacancies

Marianna Kudlyak, Murat Tasci and Didem Tuzemen

No 19-30R, Working Papers from Federal Reserve Bank of Cleveland

Abstract: Using a unique data set and a novel identification strategy, we estimate the effect of minimum wage increases on job vacancy postings. Utilizing occupation-specific county level vacancy data from the Conference Board’s Help Wanted Online for 2005-2018, we find that state-level minimum wage increases lead to substantial declines in existing and new vacancy postings in occupations with a larger share of workers who earn close to the prevailing minimum wage. We estimate that a 10 percent increase in the state level effective minimum wage reduces vacancies by 2.4 percent in the same quarter, and the cumulative effect is as large as 4.5 percent a year later. The negative effect on vacancies is more pronounced for occupations where workers typically have lower educational attainment (high school or less) and in counties with higher poverty rates. We argue that our focus on vacancies versus on employment has a distinct advantage of highlighting a mechanism through which minimum wage hikes affect labor demand. Our finding of a negative effect on vacancies is not inconsistent with the wide range of findings in the literature about the effect of minimum wage changes on employment, which is driven by changes in both hiring and separation margins.

Keywords: Search and Matching; Hiring; Minimum Wage; Vacancies (search for similar items in EconPapers)
JEL-codes: E24 E32 J30 J41 J63 J64 (search for similar items in EconPapers)
Pages: 38
Date: 2019-12-23, Revised 2022-04-21
New Economics Papers: this item is included in nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://doi.org/10.26509/frbc-wp-201930r

Related works:
Working Paper: Minimum Wage Increases and Vacancies (2022)
Working Paper: Minimum Wage Increases and Vacancies (2022)
Working Paper: Minimum Wage Increases and Vacancies (2022)
Working Paper: Minimum Wage Increases and Vacancies (2022)
Working Paper: Minimum Wage Increases and Vacancies (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:86677

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DOI: 10.26509/frbc-wp-201930r

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