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Raising the Minimum Wage for Working Men and Women in California and the Rest of America

Minimum Wage Shocks, Employment Flows and Labor Market Frictions

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We provide the first estimates of the e!ects of minimum wages on employment flows in the U.S. labor market, identifying the impact by using policy discontinuities at state borders. We find that minimum wages have a sizeable negative e!ect on employment flows but not stocks. Separations and accessions fall among a!ected workers, especially those with low tenure. We do not find changes in the duration of non-employment for separations or hires. This evidence is consistent with search models with endogenous separations, but explanations focused only on quits or only on layoffs are unlikely to explain the full complement of findings.

• Category: National • Tags: Arindrajit Dube, Michael Reich, PDF, T. William Lester