Raising the minimum wage can actually make companies more efficient and less likely to fire people down the road.
March 26, 2026
Original Paper
Minimum Wage and Employment Stickiness: Cross-Country Evidence
SSRN · 6348618
The Takeaway
Instead of just cutting staff, a higher wage floor forces managers to stop being 'sticky' or lazy with labor planning. Because workers are now more expensive, companies are pressured into investing more in training and operational efficiency, which eventually creates more stability than before the wage hike.
From the abstract
We investigate whether increases in minimum wages reduce employment stickiness. Using a crosscountry panel dataset of statutory minimum wage changes, we find that increases in minimum wages are associated with a reduction in employment stickiness. Subsample analyses further show that our result is more pronounced among low-technology firms, financially distressed firms, and firms with low cash liquidity. Moreover, our result is stronger when minimum wage growth exceeds inflation and in countries