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  4. January 2025
  5. Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment

  • John J. Horton
American Economic Review
vol. 115, no. 1, January 2025
(pp. 117–46)
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Abstract

Firms posting job openings in an online labor market were randomly assigned minimum hourly wages. When facing a minimum wage, fewer firms hired, but those they did hire paid higher wages. Hours-worked fell substantially. Treated firms shifted to hiring more productive workers. Using the platform's imposition of a market-wide minimum wage after the experiment, I find that many of the experimental results also hold in equilibrium, including the substitution towards more productive workers. However, there was also a large reduction in the number of jobs posted for which the minimum wage would likely bind.

Citation

Horton, John J. 2025. "Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment." American Economic Review, 115 (1): 117–46. DOI: 10.1257/aer.20170637

Additional Materials

JEL Classification

  • J22 Time Allocation and Labor Supply
  • J23 Labor Demand
  • J31 Wage Level and Structure; Wage Differentials
  • J38 Wages, Compensation, and Labor Costs: Public Policy