Working Paper: NBER ID: w29425
Authors: Ellora Derenoncourt; Clemens Noelke; David Weil; Bledi Taska
Abstract: Low unionization rates, a falling real federal minimum wage, and outsourcing have hampered wage growth in the low-wage sector in the US. In recent years, a number of private employers have opted to institute or raise company-wide minimum wages for their employees, sometimes in response to public pressure. To what extent do wage-setting changes at major employers spill over to other employers, and what are the broader labor market effects of these policies? In this paper, we study recent minimum wages by Amazon, Walmart, Target, CVS, and Costco using data from millions of online job ads; employee surveys; and the CPS. \nAlthough the following version of this paper presents evidence that these policies induced wage increases at low-wage jobs at other employers, where the modal response was to match the wage announced by the large retailer, we have discovered a fundamental issue with the methodology used to measure basic spillover impacts. This methodology as well as associated robustness checks used in the paper, which emulated approaches in the larger literature on minimum wage effects, leads to estimated effects that arise from statistical mean reversion. When we apply a series of placebo and related tests and simulations using revised spillover treatment effect estimators, detailed in Appendix A, we do not find evidence of the spillover effects described in the following paper. A revised paper with a full discussion of the problems of the original approach and new results regarding revised estimates of spillover effects is forthcoming.
Keywords: No keywords provided
JEL Codes: J31; J42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Statistical mean reversion (C22) | Confounding of estimated spillover effects (C21) |
| Large employers' wage announcements (J39) | Wage increases at low-wage jobs at other employers (non-policy firms) (J39) |
| Large employers' wage announcements (J39) | Non-policy firms' wages bunch at the level set by large retailers (J38) |
| Low state and local minimums (H79) | Larger spillover effects from large employers' wage announcements (J39) |
| Proximity to large firm (R30) | Larger spillover effects from large employers' wage announcements (J39) |
| Amazon wage increase (J38) | Average non-Amazon hourly wages increase (J39) |
| Large employers' wage policies (J38) | Wage adjustments at smaller firms (J31) |