Minimum Wage Shocks, Employment Flows, and Labor Market Frictions

Dubé, Arindrajit; Lester, T. William; Reich, Michael

doi:10.1086/685449

Cited by 269 publications

(225 citation statements)

References 34 publications

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“…Again using a border discontinuity design, in a study of employment flows for teens as well as restaurants, Dube, Lester, and Reich (2016) argue that their results in the form of a strongly positive wage effect, a small employment effect, and a strongly negative effect on separations are consistent with both job ladder and match-quality models with search frictions. The bottom line is that these authors' estimates of supply elasticities are lower than those assumed in M&M but still suggest that wages are some 10 to 20 percent lower on account of this dynamic monopsony power.…”

Section: Developmentmentioning

confidence: 74%

Book Review: The Effects of Minimum Wages on Employment: The Legacy of Myth and Measurement

Addison

2017

ILR Review

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Further information on publisher's website:https://doi.org/10.1177/0019793917696309aPublisher's copyright statement:Additional information: Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details.

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Section: Developmentmentioning

confidence: 74%

Book Review: The Effects of Minimum Wages on Employment: The Legacy of Myth and Measurement

Addison

2017

ILR Review

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“…1) The separations elasticity, i.e., the change in turnover rate with respect to a change in the minimum wage, equals -0.225 (see Dube, Lester, and Reich, 2013). 2) The current turnover rate in fast food is approximately 120 percent.…”

Section: Estimating Ripple Effects Raises From a Large Minimum Wage Hikementioning

confidence: 98%

A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs

Pollin¹,

Wicks‐Lim²

2016

Journal of Economic Issues

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JEL CODE: J38ABSTRACT: This paper considers the extent to which U.S. fast-food businesses could adjust to an increase in the federal minimum wage from its current level of $7.25 per hour to $15 an hour without having to resort to reducing their workforces. We consider this issue through a set of simple illustrative exercises, whereby the U.S. raises the federal minimum wage in two steps over four years, first to $10.50 within one year, then to $15 after three more years. We conclude that the fast-food industry could absorb the increase in its overall wage bill without resorting to cuts in their employment levels at any point over this four-year adjustment period. Rather, we find that the fast-food industry could fully absorb these wage bill increases through a combination of turnover reductions; trend increases in sales growth; and modest annual price increases over the four-year period. Working from the relevant existing literature, our results are based on a set of reasonable assumptions on fast-food turnover rates; the price elasticity of demand within the fast-food industry; and the underlying trend for sales growth in the industry. We also show that fast-food firms would not need to lower their average profit rate during this adjustment period. Nor would the fast-food firms need to reallocate funds generated by revenues away from any other area of their overall operations, such as marketing.We are grateful to Daniel Aaronson for his comments on a previous draft and for sharing results from some of his own preliminary research.

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“…I also plan to analyze the impact of a minimum wage on equilibrium job flows. Existing studies such as Dube et al [2016] find that minimum wages have a sizable negative effect on employment flows, especially among low-tenure workers.…”

Section: Impact Of Firing Costs In Partial Equilibriummentioning

confidence: 99%

Wage Inequality and Job Stability

Araujo

2017

Preprint

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How much wage inequality in Brazil is caused by firing costs? To answer this question, I develop and estimate a general equilibrium search and matching model with heterogeneous layoff rates among firms. Using matched employer-employee data from Brazil, I estimate the model, and I find that it replicates the observed residual wage inequality in the data. I simulate a counterfactual removal of existing firing costs, and I find that residual wage inequality drops by 26% as measured by wage variance and by 4.4% as measured by the p95-p5 ratio among 25-to 55-year-old males working in the private sector with at most a high school degree. Worker welfare among this subgroup of households increases by almost 1% in response to the abolishment of firing costs. * I especially thank Hugo Hopenhayn for his guidance and advice. I also thank Pierre

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Minimum Wage Shocks, Employment Flows, and Labor Market Frictions

Cited by 269 publications

References 34 publications

Book Review: The Effects of Minimum Wages on Employment: The Legacy of Myth and Measurement

Book Review: The Effects of Minimum Wages on Employment: The Legacy of Myth and Measurement

A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs

Wage Inequality and Job Stability

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