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Effects of the Minimum Wage on the Nonprofit Sector

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  • Jonathan Meer
  • Hedieh Tajali

Abstract

The nonprofit sector’s ability to absorb increases in labor costs differs from the private sector in a number of ways. We analyze how nonprofits are affected by changes in the minimum wage utilizing data from the Bureau of Labor Statistics and the Internal Revenue Service, linked to state minimum wages. We examine changes in reported employment and volunteering, as well as other financial statements such as revenues and expenses. The results from both datasets show a negative impact on employment for states with large statutory minimum wage increases. We observe some evidence for a reduction in the number of nonprofit establishments, fundraising expenses, and revenues from contributions.

Suggested Citation

  • Jonathan Meer & Hedieh Tajali, 2023. "Effects of the Minimum Wage on the Nonprofit Sector," NBER Working Papers 31281, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31281
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    More about this item

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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