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Minimum Wage Effects and Monopsony Explanations – Institute for Research on Labor and Employment [1]

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Date: 2023-09-25 19:30:30+00:00

We present the first causal analysis of a seven-year run-up of minimum wages to $15. Using a novel stacked county-level synthetic control estimator and data on fast-food restaurants, we find substantial pay growth and no disemployment. Our results hold among lower-wage counties and counties without local minimum wages. Minimum wage increases reduce separation rates and raise wages faster than prices at McDonald’s stores; both findings imply a monopsonistic labor market with declining rents. In the tight post-pandemic labor market, when labor supply becomes more elastic, we find positive employment effects. These become larger and statistically significant after addressing pandemic-response confounds.

JEL Codes: B41, J23, J24, J31, J38, J42

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[1] Url: https://irle.berkeley.edu/publications/working-papers/minimum-wage-effects-and-monopsony-explanations/

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