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Seeing beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes

Author

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  • Doruk Cengiz
  • Arindrajit Dube
  • Attila Lindner
  • David Zentler-Munro

Abstract

We assess the effect of the minimum wage on labor market outcomes. First, we apply modern machine learning tools to predict who is affected by the policy. Second, we implement an event study using 172 prominent minimum wage increases between 1979 and 2019. We find a clear increase in wages of affected workers and no change in employment. Furthermore, minimum wage increases have no effect on the unemployment rate, labor force participation, or labor market transitions. Overall, these findings provide little evidence of changing search effort in response to a minimum wage increase.

Suggested Citation

  • Doruk Cengiz & Arindrajit Dube & Attila Lindner & David Zentler-Munro, 2022. "Seeing beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 203-247.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/718497
    DOI: 10.1086/718497
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    Citations

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    Cited by:

    1. Andrea Mattozzi & Samuel Nocito & Francesco Sobbrio, 2022. "Fact-Checking Politicians," CESifo Working Paper Series 10122, CESifo.
    2. David Card & Fabrizio Colella & Rafael Lalive, 2021. "Gender Preferences in Job Vacancies and Workplace Gender Diversity," NBER Working Papers 29350, National Bureau of Economic Research, Inc.
    3. Arindrajit Dube & Attila S. Lindner, 2024. "Minimum Wages in the 21st Century," NBER Working Papers 32878, National Bureau of Economic Research, Inc.
    4. Paul S. Clarke & Annalivia Polselli, 2023. "Double Machine Learning for Static Panel Models with Fixed Effects," Papers 2312.08174, arXiv.org, revised Dec 2024.
    5. Devereux, Kevin & Studnicka, Zuzanna, 2024. "Non-monotonic employment effects by market structure and minimum wage level," CLEF Working Paper Series 66, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    6. Arindrajit Dube & Ben Zipperer, 2024. "Own-Wage Elasticity: Quantifying the Impact of Minimum Wages on Employment," NBER Working Papers 32925, National Bureau of Economic Research, Inc.
    7. Nocito, Samuel & Sartarelli, Marcello & Sobbrio, Francesco, 2023. "A beam of light: Media, tourism and economic development," Journal of Urban Economics, Elsevier, vol. 137(C).
    8. Alzate,David & Eliana Carranza & Duran-Franch,Joana & Truman G. Packard & Celina Proffen, 2024. "How Regulations Impact the Labor Market : A Review of the Literatures on Product and Labor Market Regulations," Policy Research Working Paper Series 10961, The World Bank.
    9. Sebastian Fossati & Joseph Marchand, 2024. "First to $15: Alberta’s Minimum Wage Policy on Employment by Wages, Ages, and Places," ILR Review, Cornell University, ILR School, vol. 77(1), pages 119-142, January.
    10. Oliveira, Carlos, 2023. "The minimum wage and the wage distribution in Portugal," Labour Economics, Elsevier, vol. 85(C).
    11. Jiménez, Bruno & Rendon, Silvio, 2022. "Labor Market Effects of Bounds on Domestic Outsourcing," IZA Discussion Papers 15692, Institute of Labor Economics (IZA).
    12. Gordon Burtch & Edward McFowland III & Mochen Yang & Gediminas Adomavicius, 2023. "EnsembleIV: Creating Instrumental Variables from Ensemble Learners for Robust Statistical Inference," Papers 2303.02820, arXiv.org, revised Dec 2024.
    13. Taeyoung Doh & Kyoo il Kim & Sungil Kim & Hwanoong Lee & Kyungho Song, 2022. "The Economic Effects of a Rapid Increase in the Minimum Wage: Evidence from South Korea Experiments," Research Working Paper RWP 22-13, Federal Reserve Bank of Kansas City.
    14. Bassier, Ihsaan, 2022. "Collective bargaining and spillovers in local labor markets," LSE Research Online Documents on Economics 118057, London School of Economics and Political Science, LSE Library.
    15. Ihsaan Bassier, 2022. "Collective bargaining and spillovers in local labor markets," CEP Discussion Papers dp1895, Centre for Economic Performance, LSE.

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