Working Paper: NBER ID: w25182
Authors: Ekaterina Jardim; Mark C. Long; Robert Plotnick; Emma Van Inwegen; Jacob Vigdor; Hilary Wething
Abstract: Using administrative employment data from the state of Washington, we use short-duration longitudinal panels to study the impact of Seattle’s minimum wage ordinance on individuals employed in low-wage jobs immediately before a wage increase. We draw counterfactual observations using nearest-neighbor matching and derive effect estimates by comparing the “treated” cohort to a placebo cohort drawn from earlier data. We attribute significant hourly wage increases and hours reductions to the policy. On net, the minimum wage increase from $9.47 to as much as $13 per hour raised earnings by an average of $8-$12 per week. The entirety of these gains accrued to workers with above-median experience at baseline; less-experienced workers saw no significant change to weekly pay. Approximately one-quarter of the earnings gains can be attributed to experienced workers making up for lost hours in Seattle with work outside the city limits. We associate the minimum wage ordinance with an 8% reduction in job turnover rates as well as a significant reduction in the rate of new entries into the workforce.
Keywords: Minimum Wage; Employment; Labor Market Dynamics
JEL Codes: J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage increase from $9.47 to $13 (J39) | significant hourly wage increases (J38) |
| minimum wage increase from $9.47 to $13 (J39) | reductions in hours worked (J22) |
| minimum wage increase from $9.47 to $13 (J39) | reduction in job turnover rates (J63) |
| significant hourly wage increases (J38) | experienced workers compensating for lost hours by working outside Seattle (J29) |