There is no conflict of interest.
Citation
Dube, A., & Lindner, A.S. (2020). City Limits: What Do Local-Area Minimum Wages Do? (No. w27928). National Bureau of Economic Research.
Highlights
- The study's objective was to examine the impact of city-level minimum wage policies on wages and employment.
- The study used a difference-in-differences design to compare the outcomes between cities with and without minimum wage policies. The authors used American Community Survey data and statistical models to compare differences between the intervention and comparison groups.
- The study did not find any significant effects of city-level minimum wage policies on wage gain or employment.
- This study receives a moderate evidence rating. This means we are somewhat confident that any estimated effects would be attributable to city-level minimum wage policies, but other factors might also have contributed. However, the study did not find statistically significant effects.
Intervention Examined
Minimum Wage
Features of the Study
Cities have the power to set minimum wage levels that are higher than what state or federal laws require. These policies can be established by state legislatures, city councils, mayors, or through ballot measures. The first city to implement this was Washington, DC in 1993, and since then, 42 cities have adopted similar minimum wage policies.
The study used a difference-in-differences design to compare outcomes between cities with and without minimum wage policies, before and after implementation of city-level minimum wage. The study sample was selected from the Census Bureau’s American Community Survey (ACS) 1-Year Public Use Microdata Sample (PUMS) files. The authors restricted the sample to cities with populations of 100,000 or more. The intervention group included 21 cities with minimum wage policies and the comparison group included 249 cities without minimum wage policies. The study used ACS data for the years 2012, 2013, 2017, and 2018. The authors conducted statistical models with controls to compare wage gain and employment between the intervention and comparison groups.
Findings
Earnings and wages
- The study found no significant differences in wage gain between cities with minimum wage policies and cities without.
Employment
- The study found no significant differences in employment between cities with minimum wage policies and cities without.
Considerations for Interpreting the Findings
The authors report that the impact of city minimum wage policies is positive on wage percentiles, helping to lower wage inequality for those at the lower end of the wage scale when considering pre-intervention characteristics. However, the findings are presented in graphical format only and the authors do not provide the tests of statistical significance.
Causal Evidence Rating
The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design. This means we are somewhat confident that any estimated effects would be attributable to city-level minimum wage policies and not to other factors. However, the study did not find statistically significant effects.