New Minimum Wage Research

Clemens Strain Figure 1 New Minimum Wage Research

Jeffrey Clemens and Michael Strain just published new research on the minimum wage. The paper is available through the NBER website. Conclusion (from Prof. Clemens’s tweet thread):

We find that the larger of states’ recent minimum wage increases have had larger impacts on employment than one would predict based on recent reviews of the literature, while smaller changes have had more positive effects. Consider states that had increased their minimum wages by more than $1 from January 2013 to January 2015. These states would go on to increase their minimum wages by an average (weighted by population) of nearly $4 by January 2019.

(From Clemens, Jeffrey and Michael Strain (2021). ” HETEROGENEOUS EFFECTS OF LARGE AND SMALL MINIMUM WAGE CHANGES: EVIDENCE OVER THE SHORT AND MEDIUM RUN USING A PRE-ANALYSIS PLAN.” National Bureau of Economic Research Working Paper 29264. September, 2021. Available at Copyright © 2021 Jeffrey Clemens and Michael R. Strain.)

Their focus is on the size of the minimum wage increase across the 50 U.S. states. They used pre-analysis which makes use of various factors that differentiate states, including an index of average house prices, personal income, and many labor force characteristics. Economists should read the whole paper, if only to see an excellent use of pre-analysis methodology.  For others, I offer the thread posted by Prof. Clemens.  Here’s a teaser graph.

Clemens Strain Figure 1 New Minimum Wage Research

Clemens, Jeffrey and Michael Strain (2021). ” HETEROGENEOUS EFFECTS OF LARGE AND SMALL MINIMUM WAGE CHANGES: EVIDENCE OVER THE SHORT AND MEDIUM RUN USING A PRE-ANALYSIS PLAN.” National Bureau of Economic Research Working Paper 29264. September, 2021. Available at Copyright © 2021 Jeffrey Clemens and Michael R. Strain.

States that increased the minimum wage by more than $1 per hour had lower job growth than those who raised the minimum wage by less than $1.  This was especially true among low-skilled workers.