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Minimum Wage Increases and Vacancies

Marianna Kudlyak, Murat Tasci () and Didem Tuzemen ()
Additional contact information
Murat Tasci: Federal Reserve Bank of Cleveland
Didem Tuzemen: Federal Reserve Bank of Kansas City

Koç University-TUSIAD Economic Research Forum Working Papers from Koc University-TUSIAD Economic Research Forum

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: Minimum Wage; Vacancies; Hiring; Search and Matching. (search for similar items in EconPapers)
JEL-codes: E24 E32 J30 J41 J63 J64 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2022-04
New Economics Papers: this item is included in nep-lma and nep-mac
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Working Paper: Minimum Wage Increases and Vacancies (2022) Downloads
Working Paper: Minimum Wage Increases and Vacancies (2022) Downloads
Working Paper: Minimum Wage Increases and Vacancies (2022) Downloads
Working Paper: Minimum Wage Increases and Vacancies (2022) Downloads
Working Paper: Minimum Wage Increases and Vacancies (2020) Downloads
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