Thread by @jeffreypclemens

A thread...

on my new paper in the Journal of Economic Perspectives, which discusses a rich set of economic margins along which firms might respond to minimum wage increases.

Look below for links to many papers of potential interest:
aeaweb.org/articles?id=10…
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The paper appears as part of a symposium on minimum wages, which includes contributions from @alanmanning4, from @arindube and Lindner, and from Fishback and Seltzer:
aeaweb.org/issues/623?to=…
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My paper’s broad point is that there is far more to the economics of minimum wages than effects on wages and employment. Further, the less widely studied aspects of the minimum wage can be crucial for assessing net impacts on workers, as well as who bears the cost.
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What do I have in mind? The paper walks through response margins including price increases, reductions in non-cash compensation, changes in job attributes like required effort, accepting reduced profits, non-compliance, and changes to production technologies.
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For each of these margins, I start by discussing the relevant conceptual issues. I then discuss the sometimes limited, but often quite interesting, empirical research on each response margin. Throughout, I try to highlight areas where more research would have high value.
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A message throughout is that the relevance of various response margins depends on the economic environment. E.g., Can firms pass costs to consumers? Depends on the scope of the market (“tradability”). Will firms evade? Depends on the enforcement environment.
[6/20]

For anyone interested in links to empirical research on non-employment dimensions of the minimum wage’s potential effects, see tweets below. There are additional references in my paper.
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A common thread is that, as with analyses of the minimum wage’s effects on employment, evidence on other response margins is mixed. This is as it should be! Economic theory highlights that we should expect different outcomes in different economic environments.
[8/20]

Price pass-through: Does it happen? (“older” papers)

Aaronson and MacDonald: jhr.uwpress.org/content/43/3/6…

Katz and Krueger:
journals.sagepub.com/doi/abs/10.117…

Lemos (a review): onlinelibrary.wiley.com/doi/full/10.11…

[9/20]

Price pass-through: three very recent papers

Harastozi and Lindner: aeaweb.org/articles?id=10…

Renkin, Montialoux, and Siegenthaler: mitpressjournals.org/doi/abs/10.116…

Leung: mitpressjournals.org/doi/abs/10.116…
[10/20]

Price pass-through: Distributional implications (includes repeats)

MaCurdy: jstor.org/stable/10.1086…

Harastozi and Lindner: aeaweb.org/articles?id=10…

Renkin, Montialoux, and Siegenthaler: mitpressjournals.org/doi/abs/10.116…
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Fringe benefits (or “noncash compensation”)

Marks: onlinelibrary.wiley.com/doi/full/10.11…

Clemens, Kahn, and Meer: nber.org/papers/w24635

Simon and Kaestner: journals.sagepub.com/doi/10.1177/00…

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Other aspects of jobs (notably “effort”)

Ku: iza.org/publications/d…

Coviello, Deserranno, and Persico: drive.google.com/file/d/0B1g6WD…

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Lower profits: Does it happen?

Draca, Machin, and Van Reenen: aeaweb.org/articles?id=10…
Bell and Machin: journals.uchicago.edu/doi/full/10.10…

Lower profits: Distributional implications

Drucker, Mazirov, and Neumark: nber.org/papers/w26571

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Evasion/non-compliance: Empirical evidence

Goraus‐Tanska and Lewandowski: onlinelibrary.wiley.com/doi/10.1111/il…

Clemens and Strain: nber.org/papers/w26969

Bernhardt, Spiller, and Theodore: journals.sagepub.com/doi/pdf/10.117…

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Evasion/non-compliance: Conceptual issues

Minimum wage evasion has interesting linkages to the Becker model of crime (@jenniferdoleac and economics of crime friends)

See Ashenfelter and Smith: jstor.org/stable/1832090…

Also, Yaniv: sciencedirect.com/science/articl…

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Firmwide Personnel Policy

Horton: john-joseph-horton.com/papers/minimum…

Clemens, Kahn, and Meer: journals.uchicago.edu/doi/full/10.10…

Giuliano: journals.uchicago.edu/doi/full/10.10…

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Automation and other aspects of production technologies:

Aaronson, French, Sorkin, and To: onlinelibrary.wiley.com/doi/full/10.11…

Lordan and Neumark: sciencedirect.com/science/articl…

Baek, Lee, and Park: papers.ssrn.com/sol3/papers.cf…

Aaronson and Phelan: onlinelibrary.wiley.com/doi/full/10.11…

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A shortcoming of “textbook” analyses of the minimum wage is that they focus students’ attention too exclusively on wages and employment. In the paper I illustrate how a rich set of firm responses to minimum wages fit into standard labor market diagrams.
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I hope the paper useful for teaching the minimum wage and providing a concise look at recent research on a broad set of the minimum wage’s potential effects.

I’m happy to have had the opportunity to publish a paper in JEP on such a widely researched and debated topic!
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