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Tuesday, April 17, 2018 at 11:40am to 1:10pm
Sage Hall, 333
Johnson Graduate School-Management, 106 Sage Hall, Ithaca, NY 14853-6201, USA
Lisa Kahn - Yale University
Personnel Policy Responses to Minimum Wage: Upskilling, Fringe Benefits, and Worker Welfare
This paper explores firm-level responses to minimum wage hikes beyond employment.
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. We also highlight that labor-labor substitution models imply important distributional consequences of the minimum wage. Using American Community Survey data and job vacancy postings from Burning Glass over the period 2011-2016, we find robust evidence that state-level minimum wage changes decreased the likelihood that individuals report having employer-sponsored health insurance and increased the skill level and skill requirements in low-paying occupations. Effects on skill requirements hold within firm. We estimate that these effects offset between 10 and 25% of wage increases associated with minimum wage hikes. We also find evidence that both insurance coverage and wage effects exhibit spillovers into occupations moderately higher up the skill distribution.