Working Paper: NBER ID: w24635
Authors: Jeffrey Clemens; Lisa B. Kahn; Jonathan Meer
Abstract: This paper explores the relationship between the minimum wage, the structure of employee compensation, and worker welfare. We advance a conceptual framework that describes the conditions under which a minimum wage increase will alter the provision of fringe benefits, alter employment outcomes, and either increase or decrease worker welfare. Using American Community Survey data from 2011-2016, we find robust evidence that state-level minimum wage changes decreased the likelihood that individuals report having employer-sponsored health insurance. Effects are largest among workers in very low-paying occupations, for whom coverage declines offset 9 percent of the wage gains associated with minimum wage hikes. We find evidence that both insurance coverage and wage effects exhibit spillovers into occupations moderately higher up the wage distribution. For these groups, reductions in coverage offset a more substantial share of the wage gains we estimate.
Keywords: minimum wage; worker welfare; fringe benefits; health insurance
JEL Codes: I13; J23; J32; J33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Minimum Wage Increase (J38) | Employer-Sponsored Health Insurance Coverage (I13) |
| Minimum Wage Increase (J38) | Worker Welfare (J83) |
| Minimum Wage Increase (J38) | Reduction in Employer-Sponsored Health Insurance Coverage in Low-Paying Occupations (J32) |
| Reduction in Employer-Sponsored Health Insurance Coverage in Low-Paying Occupations (J32) | Worker Welfare (J83) |
| Minimum Wage Increase (J38) | Reduction in Employer-Sponsored Health Insurance Coverage in Higher Wage Occupations (J32) |
| Reduction in Employer-Sponsored Health Insurance Coverage in Higher Wage Occupations (J32) | Worker Welfare (J83) |