Minimum Wages and Women

Abstract

We study how women and men working in the same minimum-wage supported job respond to, and benefit from, a minimum wage increase. Using administrative data from a major US retailer, we find that the welfare of women increases less with the minimum wage hike than that of men, even though both receive comparable pay raises. We show that this occurs because women exert more effort in response to the minimum wage increase, driven by their greater need for job retention due to less favorable outside options. This evidence points to a generalizable mechanism whereby disparities outside the firm account for welfare disparities in the impact of an important gender-neutral policy (i.e., the minimum wage)inside the firm.

Erika is an Assistant Professor in the Department of Economics at Bocconi University and an Associate Professor (w/o tenure) in the Managerial Economics and Decision Sciences Department of the Kellogg School of Management, Northwestern University. She holds a PhD from the LSE. Her work is in the fields of organizational economics, personnel economics, and development economics and has been published in among others JPE, JEEA, AER:I, REStat, and AEJ:Applied. Joint paper with Decio Coviello and Nicola Persico