- Economics
- Answering Challenges to Advanced Economies
We use a unique data set and a novel identification strategy to estimate the effect of minimum wage increases on vacancy postings. Utilizing occupation-specific county-level vacancy data from the Conference Board’s Help Wanted Online for 2005-18, we find that state-level minimum wage increases lead to substantial declines in existing and new vacancy postings in occupations with a larger share of workers earning close to the effective minimum wage. We estimate that a 10 percent increase in the state-level effective minimum wage reduces vacancies in these occupations relative to the rest by 2.4 percent in the same quarter, and the cumulative effect is as large as 4.5 percent a year later. Focusing on vacancies rather than employment allows us to highlight changes in firms’ hiring intentions in response to minimum wage increases. Coupled with the earlier U.S. evidence showing reductions in separations following minimum wage hikes, our finding of declining vacancies contributes to the broader empirical literature suggesting negligible effects of minimum wage increases on net employment.
