Payroll, Revenue, and Labor Demand Effects of the Minimum Wage

We study the impact of the minimum wage hike in Seattle from $9.47 to$13 on wagebill, labor demand, and firm revenue using administrative data from the state of Washington. We show that the minimum wage affected businesses both at the intensive and extensive margins. At the intensive margin, businesses increased their labor costs and adjusted to the minimum wage by mildly reducing demand for low-wage jobs, but they largely did not pass the increase in labor costs to prices. At the extensive margin, the minimum wage led to higher rates of business exit and shifted the composition of entering businesses towards less labor-intensive businesses. Finally, we find that the extensive margin and the intensive margin effects were of the same order of magnitude, and were equally important for understanding the impacts of the minimum wage

More Choices or Help Choosing?: Experimental Evidence on Helping Firms Hire

Broadly, there are two main ways to help employers hire: (a) expand their choice set by attracting more applicants or (b) help them choose among that choice set. I report the results of an experiment where employers in a large online labor market were given hiring assista nce that could take either form, based on the determina tion of the helper. In general, job openings with few applicants were given recruiting help, while applicants with many applicants were given selection help. All were given general advice on the hiring process. I find that employers of treated job posts were over 10% more likely to make a hire than those in the control group. While increased recruiting can potentially crowd-out other matches, I find that little if any of the experimental increase was coming at the expense of the control group. In decomposing the reasons for the increased hiring, I find evidence that both (a) and (b) were important, but with recruiting help being about three times more important than selection help. Despite assistance having a marginal cost, the hiring assistance was remarkably cost-effective and a central planner that could tax the wage bill at even just 2% could fund the intervention.S.M