The Minimum Wage, Turnover, and the Shape of the Wage Distribution

Pierre Brochu, David Green, Thomas Lemieux and James Townsend

No 33479, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper proposes an empirical approach to decompose the distributional effects of minimum wages into effects for workers moving out of employment, workers moving into employment, and workers continuing in employment. We estimate the effects of the minimum wage on the hazard rate for wages, which provides a convenient way of re-scaling the wage distribution to control for possible employment effects. We find that minimum wage increases do not result in an abnormal concentration of Job Leavers below the new minimum wage, which is inconsistent with employment effects predicted by a neoclassical model. We also find that, for Job Stayers, the spike and spillover effects of the minimum wage are simply shifted right to the new minimum wage. Our findings are consistent with a model where entry wages are set according to a job ladder, and where firms anchor their internal wage structure on the minimum wage due to fairness or internal incentives issues.

JEL-codes: J31 J38 (search for similar items in EconPapers)
Date: 2025-02
New Economics Papers: this item is included in nep-inv and nep-lma
Note: LS
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Related works:
Working Paper: The minimum wages, turnover, and the shape of the wage distribution (2023)
Working Paper: The Minimum Wage, Turnover, and the Shape of the Wage Distribution (2023)
Working Paper: The minimum wage, turnover, and the shape of the wage distribution (2023)
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