Just After Minimum Wage Hikes: Short-Run Labor-Demand Response and Reallocation

TL;DR

This study examines the immediate effects of minimum wage hikes in Japan, revealing a 2% employment decline driven by reduced vacancy creation and evidence of labor reallocation across job types and descriptions.

Contribution

It provides the first detailed analysis of short-run labor-demand responses to minimum wage increases using a wage-bin difference-in-differences approach in Japan.

Findings

2% employment decline in affected wage bins

Reduced vacancy creation as main driver

Evidence of labor reallocation across job types

Abstract

How labor markets adjust immediately after minimum wage hikes remains an open, policy-relevant question. This paper studies short-run minimum-wage effects in Japan's spot labor market using Timee data and a wage-bin difference-in-differences design. We find a 2\% employment decline in affected bins, driven by reduced vacancy creation rather than worker supply. Effects are more negative where the minimum-wage bite is higher and in low-wage occupations. Using job descriptions and amenity information, we document reallocation across job types: postings shift toward greater amenity provision and experienced-worker targeting, while female-targeted descriptions become less common, suggesting short-run labor-demand adjustments may foreshadow longer-run reallocation.