Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure

Abstract

This paper uses job applications data to test the existence of non-competitive, ex—ante rents in the labor market. We first examine whether jobs that pay the legal minimum wage face an excessive supply of labor as measured by the number of job applications received for the most recent position filled by the firm. The results indicate that openings for jobs that pay the minimum wage attract significantly more job applications than jobs that pay either more or less than the minimnum wage. This spike in the job application rate distribution indicates that ex-ante rents generated for enp1oyees by an above market-level minimum wage do not appear to be completely dissipated by employer actions. The second part of the paper uses a similar approach to examine whether jobs in high-wage industries pay above market-clearing wage rates. We find a weak, positive relationship between inter-industry application differentials and inter-industry wage differentials. In addition, our results indicate that employer size has a sizeable positive effect on the job application rate even after controlling for the wage rate. The paper considers several possible explanations for these findings.