Working Papers

Small Businesses and the Minimum Wage


We provide the first causal analysis of the role of firm size on minimum wage effects in the U.S. Using a stacked event study estimator, we find that minimum wages increase pay in low wage industries, particularly so in small businesses. We do not detect any corresponding disemployment effects. For teens, wage increases are stronger in larger businesses and come with modest disemployment effects in smaller ones. These results point to strong monopsony power for large firms and backward bending teen labor supply curves.

JEL codes: J7, J15, J31, J38

Keywords: minimum wages, small businesses, medium businesses, QWI, CBP