Minimum Wage, Employment, and Margins of Adjustment Evidence from Employer-Employee Matched Panel Data

Jungmin Lee

doi:10.3368/jhr.0820-11082R3

Minimum Wage, Employment, and Margins of Adjustment Evidence from Employer-Employee Matched Panel Data

2026-01-01

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Jungmin Lee *

P

Park, Geumbi

DOI：10.3368/jhr.0820-11082R3

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We decompose the employment effect of the minimum wage into changes in employment within continued establishments and changes due to the exits of establishments. For small-sized establishments, we distinguish between other labor adjustment margins, such as hours worked, hiring, and separation at the individual level. Using employer-employee matched panel data, we show that the magnitude and channels of the employment effect differ by establishment size and industry. We find a negative effect of the minimum wage on employment growth, which is highly concentrated among small establishments. In particular, in the food and lodging and manufacturing industries, a substantial part of the effect is driven by business closing.

Keywords:

LABOR-MARKET

IMPACT

SUBSTITUTION

INEQUALITY

Minimum Wage, Employment, and Margins of Adjustment Evidence from Employer-Employee Matched Panel Data

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