Why higher pay leads to more crime
The effects on criminal behaviour of raising the minimum wage for those aged 25 and over in the United Kingdom are analysed, using data on police stop and search activities. A 1% increase in the minimum wage raises the fraction of people stopped by the police by 2.96%, the fraction of people caught with an incriminating item by 1.43%, and the fraction of people arrested as a consequence by 1.27%. This effect is almost entirely driven by drug searches made outside business hours, suggesting that the minimum wage raises crime principally by raising disposable income – and drug consumption – among workers.
Menu adjustment in response to the minimum wage: A return to the New Jersey-Pennsylvania border (with Michael R. Strain)
This paper studies how output prices are affected by increases in the minimum wage. To the best of our knowledge, we provide the first examination of how the prices of an entire menu of items at a single business adjust in response to a minimum wage increase. Using data we gather form a fast-food chain, we find that a $1 minimum wage rise increased average prices by 7 cents, implying a pass-through elasticity of around 0.13. We also study how the price response across individual goods varies with the labor intensity in production of those goods. Consistent with a theoretical framework we describe, the prices of items that require more labor to produce increased by more due to the minimum wage increase. A $1 increase in the minimum wage raised the item price by an extra 0.3 cents for every additional preparation step. We also find that more price adjustment takes place at the store level than at the item level, and that it takes longer for prices to respond to a minimum wage increase than the existing literature suggests.
The effect of wages on job vacancy duration: Evidence from a spatial discontinuity (with Charles Carter and Judith M. Delaney)
We exploit a spatial discontinuity in the wages paid by the United Kingdom's National Health Service to examine how wages affect the duration of time a vacancy is advertised. NHS workers in inner London are mandated by law to be paid an extra 4.3% more than those who work in outer London. We use a regression discontinuity design and estimate an elasticity of duration with respect to wages of -6.3. This number is larger than reported by previous studies and suggests that firms can fill worker shortages faster by raising wages. This also highlights the importance this margin of worker recruitment when analysing firm search and job match. Our results are robust to various checks including a placebo test using fictitious borders and are robust to changes in the bandwidth and the duration measure. The estimates are similar across all occupational groups in the NHS and are not limited to jobs that require specific skills such as nurses and therapists. Our results provide evidence for policy makers which suggests that increasing the wages paid to NHS workers may lead to increased cost savings by reducing the need to hire expensive agency staff and may also lead to better health outcomes of the population through reduced staff shortages.
Running up that hill: Fitness in the face of recession (with Alex Bryson and J. James Reade)
Drawing on 28 million observations on people's running times in a free weekly 5 kilometre running event, Parkrun, we examine whether labour market conditions affect fitness. Running times improve during recessions for men and women aged 50 and above but worsen for men aged 20-49 and women aged 20-29, suggesting that the fall in the opportunity costs of fitness during recessions is the dominant factor for elderly runners, whereas the income effect induced by unemployment dominates for prime age workers. Participation in Parkrun is not sensitive to the business cycle so our results are not driven by compositional changes.
How the minimum wage affects training among apprentices
Previous studies have found mixed evidence regarding the effects of the minimum wage on training levels. This paper exploits a discontinuity in the minimum wage received by apprentices in the United Kingdom to examine this question. Workers aged 19-20 receive a substantial increase in the minimum wage after one year on an apprenticeship, whereas workers aged under 19 do not experience a change in the minimum wage at this point. Using data from the Apprenticeship Pay Survey, regression discontinuity design estimates suggest that the increase in the minimum wage has no overall effect on training among 19-20 year-olds. However, among firms that are compliant with the minimum wage legislation, the minimum wage reduces training by 11-23%. Since relatively few employers pay exactly the minimum wage, this implies a large elasticity of training with respect to the wage. Additional data from the Apprenticeship Evaluation Survey reveals that the overall effect of a 1% wage increase, including its effect on training, is a 0.1% reduction in a person's self-reported career prospects and a near-zero effect on his/her satisfaction with the apprenticeship.
The ongoing impact of gender pay gap transparency legislation (with Melanie K. Jones and Ezgi Kaya)
This paper examines the ongoing impact of gender pay gap transparency legislation using a sudden COVID-19-induced temporary suspension to legislation in the UK. Compared to organisations that did not report during the suspension year, reporting organisations have a 6% lower gender pay gap a year later. This is driven by a relative increase in females in the top pay quartile at the same time as rising female concentration in the workforce overall. Further analysis supports the hypothesis that ongoing reporting is most effective in organisations with weaker pre-existing pressures to narrow their gender pay gap through female representation and voice.
Spillovers and substitutability in production (with Alex Bryson)
Can the existence of positive productivity spillovers between co-workers be explained by the presence of complementarities in a firm's production function? A simple model demonstrates that this is possible when workers perform their tasks sequentially and part of individuals' pay is determined by the firm's output, but also that negative spillovers may arise when workers can raise overall output unilaterally. Data from major league baseball support these predictions. They show that the pairs of players who are most complementary in the production process exert the largest positive spillovers on each other, but that negative spillovers predominate between all player pairs.
Productivity over the life cycle
Do people devote more effort to their jobs at times when that effort is most rewarded? All workers have some degree of control over their productivity and therefore might be expected to optimally allocate this over the life cycle, in response to anticipated changes in the rewards for performance. Major league baseball provides an ideal setting in which to test whether this occurs, because the nature of the salary bargaining system means that the rate at which performance is rewarded increases suddenly and substantially at predetermined points in a player's career. Using annual data for 2005-2010, players are found to perform better during seasons when they know pay is most sensitive to performance. In addition, accumulated forecast errors in lifetime income are found to have a negative effect on performance, consistent with expectations.
Female labor supply and marital instability
Married women work longer hours when they face higher probabilities of divorce. However, the reasons for this are unclear. This paper presents a simple model of labor supply among married women in the face of marital instability. This predicts that a woman's labor supply response to a given change in the probability of divorce is determined by her discount factor and the degree to which her wage is affected by past hours of work. Data from the National Longitudinal Survey of Youth 1979 are then used to test these predictions. Married women are found to work longer hours when they face a high probability of divorce in the following year. Consistent with theory, the magnitude of this response is found to be largest among women with high returns to work hours. However, a woman's discount factor is not found to have a significant effect on her labor supply responsiveness in most specifications. Similar relationships are found when a woman's happiness with her marriage is used as a proxy for divorce risk.