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Unintended workplace safety consequences of minimum wages

Author

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  • Liu, Qing
  • Lu, Ruosi
  • Teng Sun, Stephen
  • Zhang, Meng

Abstract

We investigate the unintended impact of minimum wage increases on workplace safety. Using establishment-level data from the United States and a cohort-based stacked difference-in-differences design, we find that large increases in minimum wages have significant adverse effects on workplace safety. Our findings indicate that, on average, a large minimum wage increase results in a 4.6 percent increase in the total case rate. Event study estimates show that this adverse effect persists in the medium run. Furthermore, we find a more salient effect for firms more likely to be financially constrained or subject to a higher labor market rigidity in firing workers. We provide suggestive evidence that small minimum wage increases might reduce injury rates, highlighting the potential heterogeneity in the impact of minimum wage changes. We do not find evidence that capital-labor substitution could be behind the findings.

Suggested Citation

  • Liu, Qing & Lu, Ruosi & Teng Sun, Stephen & Zhang, Meng, 2024. "Unintended workplace safety consequences of minimum wages," Journal of Public Economics, Elsevier, vol. 239(C).
  • Handle: RePEc:eee:pubeco:v:239:y:2024:i:c:s004727272400183x
    DOI: 10.1016/j.jpubeco.2024.105247
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    More about this item

    Keywords

    Minimum wage; Workplace safety; Financial constraints; Labor market regulations;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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