Price floors and employer preferences: Evidence from a minimum wage experiment
Published: American Economic Review 115(1): 117-146 (2025)
Last updated: 2025-01-01
Summary
Minimum hourly wages were randomly imposed on firms posting job openings in an online labor market. A higher minimum wage raised the wages of hired workers substantially. However, there was some reduction in hiring and large reductions in hours-worked. Treated firms hired more productive workers, which can explain, in part, the reduction in hours-worked: with more productive workers, projects were completed in less time. At the conclusion of the experiment, the platform imposed a market-wide minimum wage. A difference-in-differences analysis shows that, in equilibrium, firms still substitute towards more productive workers, adversely affecting less productive workers.
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Coverage
Higher minimum wage may have losers, The New York Times Minimum wage warriers see certainty in ambiguity, Bloomberg View Central Bank Research, Wall Street Journal
Cite
@article{horton2025pricefloorsandemployerpreferencesevidencefromaminimumwageexperiment,
title = {{Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment}},
author = {Horton, John J.},
journal = {American Economic Review},
year = {2025},
volume = {115},
number = {1},
pages = {117-146},
doi = {10.1257/aer.20170637},
url = {https://doi.org/10.1257/aer.20170637}
}