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The Economic Impact of the Boston Living Wage Ordinance

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Abstract

This paper presents one of the first quantitative assessments of the effect living wage laws have had on firms covered by their mandate. Applying difference-in-difference estimation methods to survey data from Boston, Massachusetts, I find little evidence of reduced employment or hours worked, following living wage implementation. Instead, there is strong evidence that firms actually shifted from part-time towards full-time staffing as a result of Boston's living wage law. Estimates also reveal a substantial degree of wage compression within firms who raised wages. Finding no evidence of reduced employment or hours, this paper uses qualitative survey data to examine other ways in which firms may have adjusted to higher wages. I find some evidence that covered firms have taken lower profits as a way to adjust to the Boston law.

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