Working Paper: NBER ID: w31196
Authors: Garrett C. Taylor; James E. West
Abstract: Using monthly data from major U.S. metropolitan areas that span state borders, we estimate the elasticity of employment with respect to the minimum wage using a difference-in-differences design with continuous treatment in two-digit industries of 71 (Arts, Entertainment and Recreation) and 72 (Accommodation and Food Services). In specifications that control for differences in state sales, personal and corporate income tax rates, we find negative average causal response on the treated (ACRT) in six-digit industries where we expect large numbers of young, entry-level employees, but positive correlations in other industries. Our results illustrate important heterogeneities in minimum wage effects in urban versus rural areas.
Keywords: No keywords provided
JEL Codes: J21; J31; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Minimum wage increase (J38) | Decrease in employment levels in limited-service restaurant sector (NAICS 722513) (J23) |
| Minimum wage increase (J38) | Negative average causal response on employment in treated areas (ACRT) (J68) |
| Minimum wage increase (J38) | Amplified negative employment elasticities for golf courses and country clubs (J79) |
| Minimum wage increase (J38) | Positive correlations for certain sectors in rural areas (R11) |
| State tax rates (H71) | Isolate causal impact of minimum wage changes (J38) |