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Working Paper

Minimum Wage Increases and Vacancies

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We estimate the impact of minimum-wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use propriety, county-level vacancy data from the Conference Board’s Help Wanted Online database. Our identification relies on the disproportionate effects of minimum-wage hikes on different occupations, as the wage distribution around the binding minimum wage differs by occupation. We find that minimum-wage increases during the 2005-2018 period have led to substantial declines in vacancy postings in at-risk occupations, occupations with a larger share of employment around the prevailing minimum wage. Our estimate implies that a 10 percent increase in the binding minimum- wage level reduces vacancies by 2.4 percent in this group. The negative effect is concentrated not exclusively in the routine jobs, but more in the manual occupations.
Topics
Labor economics
12.23.2019ISSN 2573-7953 WP 19-30Revisions WP 19-30RDOI 10.26509/frbc-wp-201930
Keywords minimum wage, vacancies, hiring, search and matching
JEL Classification Codes E24, E32, J30, J41, J63, J64

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Kudlyak, Marianna, Murat Tasci, and Didem Tüzemen. 2019. “Minimum Wage Increases and Vacancies.” Federal Reserve Bank of Cleveland, Working Paper No. 19-30. https://doi.org/10.26509/frbc-wp-201930