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Minimum wages and firm value

Bell, Brian and Machin, Stephen (2018) Minimum wages and firm value. Journal of Labor Economics, 36 (1). pp. 159-195. ISSN 0734-306X

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Identification Number: 10.1086/693870


How does firm value change in response to a minimum wage hike? This paper exploits the announcement of a big change in the UK minimum wage that was both totally unanticipated and free of uncertainty. The stock market response to this is examined in an event study setting. The analysis uncovers significant falls in the stock market value of low-wage firms. In light of this finding, the paper concludes by discussing magnitudes of response, including longer-term modes of firm adjustment to the cost shock induced by the minimum wage hike.

Item Type: Article
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Additional Information: © 2017 by The University of Chicago
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
Date Deposited: 11 Jun 2018 10:00
Last Modified: 15 May 2024 23:17

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