In recent years, a new wave of state and local activity has transformed minimum wage policy in the U.S. As of August 2018, ten large cities and seven states have enacted minimum wage policies in the $12 to $15 range.1 Dozens of smaller cities and counties have also enacted wage standards in this range.2 These higher minimum wages, which are being phased in gradually, will cover well over 20 percent of the U.S. workforce. With a substantial number of additional cities and states poised to soon enact similar policies, a large portion of the U.S. labor market will be held to a higher wage standard than has been typical over the past 50 years.
These minimum wage levels substantially exceed the previous peak in the federal minimum wage, which reached just under $10 (in today’s dollars) in the late 1960s. As a result, the new policies will increase pay directly for 15 to 30 percent of the workforce in these cities and as much as 40 to 50 percent of the workforce in some industries and regions. By contrast, the federal and state minimum wage increases between 1984 and 2014 increased pay directly for less than eight percent of the applicable workforce.
This report examines the effects of these new policies. Although minimum wage effects on employment have been much studied and debated, this new wave of higher minimum wages attains levels beyond the evidential reach of most previous studies. Moreover, city-level policies might have effects that differ from those of state and federal policies. Yet, most of the empirical studies of minimum wages focus on the state and federal-level policies. The literature on the effects of city-level minimum wages is much smaller. Our report helps fill these gaps.
The New Wave of Local Minimum Wage Policies: Evidence From Six Cities by Sylvia Allegretto, Anna Godøy, Carl Nadler, Michael Reich :: SSRNOctober 17, 2018
Medicaid and the Labor Supply of Single Mothers: Implications for Health Care Reform by R. Vincent Pohl :: SSRNSeptember 16, 2018
The Medicaid expansions and health insurance subsidies of the Affordable Care Act (ACA) change work incentives for single mothers. To evaluate the employment effects of these policies ex ante, I estimate a model of labor supply and health insurance choice exploiting variation in pre‐ACA Medicaid policies. Simulations show that single mothers increase their labor supply at the extensive and intensive margin by 12% and 7%, respectively, uninsurance rates decline by up to 40%, and an average family’s welfare improves by 1,600 dollars per year. Health insurance subsidies and not Medicaid expansions mostly drive these effects.
We investigate whether taxpayers respond to a large, ACA-induced upward tax notch at the Federal Poverty Level. Using administrative tax data, we document bunching in the income distribution and provide estimates of the taxable income elasticity. Our estimates are the only ones using US data that are identified by panel variation in budget constraints rather than functional form assumptions (Blomquist and Newey 2017), a feature of our novel longitudinal estimator. Consistent with Saez (2010), we find bunching only among the self-employed. Analysis of linked tax and survey data suggests that bunching is likely not representative of changes in labor supply.
This paper presents results from the first year of a multi-year, pre-committed research design for analyzing recent state-level minimum wage changes. Through 2015 and 2016, we estimate that relatively large statutory minimum wage increases have reduced employment among low-skilled population groups by just under 1.5 percentage points. Our estimates of the effects of smaller minimum wage increases are more variable and include both moderately large positive values and modest negative values.Our estimates of the effects of increases linked to inflation-indexing provisions are also quite variable, taking a small positive value on average across specifications. Results including 2016 diverge nontrivially when we compare estimates using the American Community Survey (ACS) to estimates using the Current Population Survey (CPS), with estimates tending to be more negative in the ACS. Analysis of future data will be needed to determine whether this difference across surveys is most appropriately attributed to sampling variations or to some other cause.
I study job lock and job push, the twin phenomena believed to be caused by employment-contingent health insurance (ECHI). Using variation in Medicaid eligibility among household members of male workers as a proxy for shifts in workers’ dependence on employment for health insurance, I estimate large job lock and job push effects. For married workers, Medicaid eligibility for one household member results in an increase in the likelihood of a voluntary job exit over a four-month period by approximately 34%. For job push, the transition rate into jobs with ECHI among all workers falls on average by 26%.
Little evidence exists on the Affordable Care Act (ACA) on criminal behavior, a gap in the literature that this paper seeks to address. Using a one period static model of criminal behavior, I argue we should anticipate a decrease in time devoted to criminal activities in response to the expansion, since the availability of public health insurance not only has a pure negative income effect on crime but also raises the opportunity cost of crime. This prediction is particularly relevant for the ACA expansion, because it primarily affects childless adults, the population that is most likely to engage in criminal behavior. I validate this forecast using a difference-in-differences approach, estimating the expansion’s effects on a panel dataset of state- and county-level crime rates. My point estimates show that the ACA Medicaid expansion is negatively related to burglary, motor vehicle theft, criminal homicide, robbery, and aggravated assault. The value of this Medicaid expansion induced reduction in crime to expansion states is almost $10 billion per year.
We examine how the Affordable Care Act’s dependent coverage mandate (DCM) affected young adults’ time allocation. Exploiting more accurate measures from the American Time Use Surveys, we find that the DCM reduced labor supply. The question then arises, what have these adults done with the extra time? Estimates suggest a reduction in job‐lock, as well as in the duration of the average doctor’s visit, including time spent waiting and receiving care. The latter effect is consistent with substitution from emergency‐department utilization toward more routine care. Estimates suggest that the extra time has gone into socializing, and into educational and job‐search activities.