Author : Sudheer Chava
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (113 download)
Book Synopsis Does a One-size-fits-all Minimum Wage Cause Financial Stress for Small Businesses? by : Sudheer Chava
Download or read book Does a One-size-fits-all Minimum Wage Cause Financial Stress for Small Businesses? written by Sudheer Chava and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do increases in federal minimum wage impact the financial health of small businesses? Using intertemporal variation in whether a state's minimum wage is bound by the federal rate and credit-score data for approximately 15.2 million establishments for the period 1989-2013, we find that increases in the federal minimum wage worsen the financial health of small businesses in the affected states. Small, young, labor-intensive, minimum-wage sensitive establishments located in the states bound to the federal minimum wage and those located in competitive and low-income areas experience higher financial stress. Increases in the minimum wage also lead to lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate for small businesses. The results are robust to using nearest-neighbor matching and geographic regression discontinuity design. Our results document some potential costs of a one-size-fits-all nationwide minimum wage, and we highlight how it can have an adverse effect on the financial health of some small businesses.