Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment
American Economic Review · 2025 · Volume 115 · Issue 1
Abstract
Firms posting job openings in an online labor market were randomly assigned minimum hourly wages. When facing a minimum wage, fewer firms hired, but those they did hire paid higher wages. Hours-worked fell substantially. Treated firms shifted to hiring more productive workers. Using the platform's imposition of a market-wide minimum wage after the experiment, I find that many of the experimental results also hold in equilibrium, including the substitution towards more productive workers. However, there was also a large reduction in the number of jobs posted for which the minimum wage would likely bind.
Keywords
Time Allocation and Labor Supply, Labor Demand, Wage Level and Structure, Wage Differentials, Wages, Compensation, and Labor Costs: Public Policy
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