Journal of Public Economics, 167(2018):190-204. November 2018.
- We study peer effects in absenteeism among workplace colleagues. Gatekeeping is an essential task in many insurance systems. In this study we exploit exogenous shifts of general practitioners (GPs) occurring when physicians quit or retire. We find that these shifts induce changes in absenteeism for affected workers. By utilizing high-quality Norwegian matched employer-employee data with detailed individual information on certified sick leave during the period 2003–2012, we can study how the transfer of workers between GPs affects co-workers’ absenteeism. We identify strong causal positive peer effects in absenteeism: a one day change in focal worker sickness absence transfers to a 0.41 day shift in peer absence.
ILR Review, 71(1):35-63. January 2018.
- The authors analyze 884 Internet-based restaurant menus from inside and outside San Jose, California, which they collected before and after the city implemented a 25% minimum wage increase in 2013. Their findings suggest that nearly all of the cost increase was passed through to consumers, as prices rose 1.45% on average. Minimum wage price elasticities averaged 0.058 for all restaurants and ranged from 0.044 to 0.109, depending on the type of restaurant. The authors’ estimate of payroll cost increases net of turnover savings is consistent with these findings. Equally important, border effects for restaurants are smaller than is often conjectured. Price differences among restaurants that are one-half mile from either side of the policy border are not competed away, indicating that restaurant demand is spatially inelastic. These results imply that city-wide minimum wage policies need not result in substantive negative employment effects nor shifts of economic activity to nearby areas.
ILR Review 70(3):559-592. May 2017.
- The authors assess the critique by Neumark, Salas, and Wascher (2014) of minimum wage studies that found small effects on teen employment. Data from 1979 to 2014 contradict NSW; the authors show that the disemployment suggested by a model assuming parallel trends across U.S. states mostly reflects differential pre-existing trends. A data-driven LASSO procedure that optimally corrects for state trends produces a small employment elasticity (–0.01). Even a highly sparse model rules out substantial disemployment effects, contrary to NSW’s claim that the authors discard too much information. Synthetic controls do place more weight on nearby states—confirming the value of regional controls—and generate an elasticity of −0.04. A similar elasticity (−0.06) obtains from a design comparing contiguous border counties, which the authors show to be good controls. NSW’s preferred matching estimates mix treatment and control units, obtain poor matches, and find the highest employment declines where the relative minimum wage falls. These findings refute NSW’s key claims.
Journal of Labor Economics, 34(3):663-704. April 2016.
- We provide the first estimates of the effects of minimum wages on employment flows in the US labor market, identifying the impact by using policy discontinuities at state borders. We find that minimum wages have a sizable negative effect on employment flows but not on stocks. Separations and accessions fall among affected workers, especially those with low tenure. We do not find changes in the duration of nonemployment for separations or hires. This evidence is consistent with search models with endogenous separations.
Industrial Relations: A Journal of Economy and Society, 54(4):622–647. October 2015.
- We exploit more than 20 years of changes in state-level tipped wage policy and estimate earnings and employment effects of the tipped wage using county-level panel data on full-service restaurants (FSR). We extend earlier work by Dube, Lester, and Reich (2010) and compare outcomes between contiguous counties that straddle a state border. We find a 10-percent increase in the tipped wage increases earnings in FSRs about 0.4 percent. Employment elasticities are sensitive to the inclusion of controls for unobserved spatial heterogeneity. In our preferred models, we find small, insignificant effects of the tipped wage on FSR employment.
Industrial Relations: A Journal of Economy and Society, 54(4):538-546. October 2015.
- I provide here a historical overview of the impact of minimum wage legislation, enacted over 75 years ago in the Fair Labor Standards Act (FLSA) of 1938 and as amended subsequently on numerous occasions.
Given elected officials’ caution today about raising the minimum wage in bad economic times, the timing of the passage of the FLSA is remarkable. After a long and heated political debate, Congress passed the FLSA in 1938, establishing a nationwide minimum wage of $0.25 per hour, with increases to $0.30 in 1939 and to $0.40 in 1945. Importantly, the federal minimum wage established a floor, not a ceiling. States and localities could enact higher minimum wages—although none did until the 1980s.
Reich, Michael. “The Effects of Minimum Wages on the Economy and on Inequality.” In conference volume, Wage Policies for a Better Future: Minimum Wage Regimes and Income-Led Growth in Comparative Perspective, Korea Labor Institute. November 2015. In English and Korean.
Monthly Labor Review, US Bureau of Labor Statistics. September 2014.
- A study using Current Population Survey data shows that, from 1996 to 2012, elementary, middle, and high school teachers earned less than other college graduates, but the gap was smaller for public school teachers and smaller still if they had union representation; moreover, the mitigating effects are stronger for female than male teachers, so the within-gender pay gaps are much larger for male teachers.
Journal of Economic Issues, 48(2). June 2014.
In When Mandates Work, Michael Reich, Ken Jacobs, and Miranda Dietz, eds. University of California Press. January 2014.
- Most of the first wave of living wage ordinances that were enacted in the mid-1990s involved minimum pay scales that were substantially above federal and state minimum wages. Typically they set a standard of $8.00 or more per hour when the minimum wage was $5.15. Policy makers gen- erally assumed that a living wage policy could not work in trade-based goods- or service-producing sectors that were subject to the forces of tech- nological change and global competition. Consequently, living wage ordi- nances typically covered only workers on municipal service contracts, or only about 3 percent to 5 percent of the low-wage workers in a city. The implementation of these ordinances often involved granting numerous waivers and exemptions, further reducing their impact. Consequently, the first ordinances were thought to have small spillover impacts on the local low-wage labor market (Freeman 2005).