JUE insight: City size, monopsony, and the employment effects of minimum wages
Abstract
We assess how minimum wage effects on restaurant employment in the U.S. vary with market size and monopsony power. Using city-level data, we construct monopsony proxies based on labor flows and concentration. Minimum wages bind less in larger cities, consistent with the urban wage premium, and omitting this relationship overstates how labor market power reduces adverse employment effects of minimum wages. Nonetheless, accounting for size, lower labor market fluidity is linked to weaker employment effects, consistent with search models. By contrast, concentration-based proxies are less informative in this setting: employer-density measures move opposite to theory, while HHI exhibits insufficient variation.
Fields of Study & Subjects
Regional Economics and Spatial Analysis
Urban
Neighborhood
and Segregation Studies
Spatial and Panel Data Analysis
Publication details
- Journal / source
- Journal of Urban Economics
- Publisher
- Elsevier BV
- Volume
- 154
- Pages
- 103868–103868
- Publication date
- 4 June 2026
- Language
- EN