PDFDownload paper RWP 20-22, December 2020

We estimate the impact of minimum wage increases on the quantity of labor demanded as measured by firms’ vacancy postings. We use proprietary, county-level vacancy data from the Conference Board’s Help Wanted Online to analyze the effects of minimum wage increases on the quantity of labor demanded. 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 2005–18 period led to substantial declines in vacancy postings in 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.

JEL Classification: E24, E32, J21, J24, J62

Article Citation

  • Kudlyak, Marianna, Murat Tasci, and Didem Tüzemen. “Minimum Wage Increases and Vacancies.” 2020. Federal Reserve Bank of Kansas City, Research Working Paper no. 20-22, December. Available External Linkhttps://doi.org/10.18651/RWP2020-22

Author

Didem Tüzemen

Senior Economist

Didem Tüzemen is a Senior Economist in the Economic Research Department at the Federal Reserve Bank of Kansas City. Ms. Tüzemen joined the department in July 2011 after earning h…