This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2021
  4. Preliminary Program
  5. Minimum Wages, Self-Employment and Job Vacancies
« Back to Results

Minimum Wages, Self-Employment and Job Vacancies

Paper Session

Tuesday, Jan. 5, 2021 10:00 AM - 12:00 PM (EST)

Hosted By: Labor and Employment Relations Association
  • Chair: William M. Rodgers III, Rutgers University

The Minimum Wage, Self-Employment and the Online Gig Economy

Benjamin Glasner
,
University of Washington

Abstract

This paper estimates the impact of the real minimum wage on work exempted from the Fair Labor Standards Act, including the self-employed and independent contractors. Using data on nonemployer establishments, I test the degree to which the minimum wage impacts the propensity of workers to engage in the exempt labor market, and the average receipts taken in while participating. Using two-way fixed effect models, recently developed difference-in-difference methods from Callaway and Sant’Anna (2019) and de Chaisemartin and d’Haultfoeuille (2019), and a generalized synthetic control design on local minimum wage changes, I find that increases in the minimum wage result in increased participation in work exempted from the minimum wage. For a $1 increase in the minimum wage between 2010 and 2018, the number of nonemployer establishments per member of the labor force increases by 0.0029, or ~1.96% of the total stock of nonemployer establishments. This positive relationship is driven by counties with low labor market concentration, as measured by county level HHI, and the expansion of the online gig economy. I estimate that a shift to a $15 federal dollar minimum wage in 2018 would have resulted in an additional 2,995,842 nonemployer establishments.

Minimum Wage Increases and Vacancies

Didem Tuzemen
,
Federal Reserve Bank of Kansas City
Murat Tasci
,
Federal Reserve Bank of Cleveland
Marianna Kudlyak
,
Federal Reserve Bank of San Francisco

Abstract

We estimate the impact of minimum wage increases on the quantity of labor demanded as measured by firms' vacancy postings. This is in contrast to the existing and highly contentious literature that studies the effect of the minimum wage on employment, which is an equilibrium outcome shaped by a combination of changes in the firms' hiring and firing, quantity of labor demanded and labor supplied, and other factors. We use confidential, county-level vacancy data from the Conference Board's Help Wanted Online Data Series that cover the period from 2004 to 2017. The vacancy counts are available at the 6-digit occupation level, reported separately for total vacancies and new vacancies, allowing us to distinguish between stocks and flows of vacancies. We separately study state-level increases in the minimum wages, as well as minimum wage increases at the sub-state jurisdiction levels. We find that minimum wage increases lead to substantial declines in new vacancy postings. Estimating the impact of minimum wage hikes on vacancy creation for different job categories is under way.

State Minimum Wage Increases and Self-Employment: Analysis of Heterogeneous Treatment Effects Across Occupations

Dillan Bono-Lunn
,
Elon University
Jeremy Moulton
,
University of North Carolina-Chapel Hill
John Scott
,
Pew Charitable Trusts

Abstract

Previous empirical work on the minimum wage has examined its potential impacts on unemployment, however there may be other potential consequences for workers. How do employees and employers alter their behavior in response to an increased state minimum wage? Insofar as self-employment is a substitute for hired employment, an a priori prediction of the effect of a minimum wage increase on self-employment is ambiguous. We use American Community Survey (ACS) data from 2000-2017 matched with state minimum wage data (Neumark, 2019). Employing a state fixed effects model, we examine the heterogeneous treatment effects of state minimum wage levels on the rates of self-employment across various occupations, looking at both the probability of a worker being self-employed as well as logged counts of self-employed workers within an occupation-year. We stratify our model by occupation, identifying a quasi-treatment group of occupations (occupations typically characterized as having lower skills requirements and are easily separable from an employer-employee relationship) and a quasi-control group of occupations (occupations typically characterized as having lower skills requirements and are difficult to separate from an employer-employee relationship. Among workers across all occupations, minimum wage increases are associated with increases in both self-employment and hired employment counts. However, among treated occupations, a one percent increase in minimum wage is associated with a two percentage point decrease in the within-occupation share of self-employment., with differential impacts depending on incorporation status. We theorize that individuals weigh the relative gains to self-employment and hired employment against relative risk of self-employment and their own risk aversion. Workers previously classified as self-employed under a lower minimum wage are induced into hired employment following a minimum wage increase; this is supported by the negative association between minimum wage and self-employment among treated occupations, which have a higher existing propensity to be self-employed.
JEL Classifications
  • J3 - Wages, Compensation, and Labor Costs