CXO

Do Frictions Matter In The Labor Market? Accessions, Separations And Minimum Wage Effects

Date Added: Oct 2010
Format: PDF

The authors provide the first test of the effects of U.S. minimum wages on labor market flows (accession, separation and turnover rates). Using county pairs straddling borders with minimum wage differences, they find large negative effects on all three measures, but no disemployment effects on teens or restaurant workers. Separation and accessions among restaurant workers falls considerably among fast food establishments, among teens and young adults, and for jobs with less than one quarter tenure. The teen, young adult and female compositions of the restaurant workforce do not change in response to minimum wage increases.