Research Colloquium - Higher Wages, Service Quality, and Firm Profitability:Evidence from Nursing Homes and Minimum Wage Reforms
Time
Tuesday, 15. June 2021
15:15 - 16:45
Location
online
Organizer
Junior Professorship in Labour Economics
Speaker:
Krista Ruffini (Federal Reserve Bank of Minneapolis)
Higher Wages, Service Quality, and Firm Profitability: Evidence from Nursing Homes and Minimum Wage Reforms
Abstract: This paper examines whether higher earnings for frontline workers affect the quality of services consumers receive. I leverage wage increases in the statutory minimum wage, combined with worker, consumer, and rm outcomes in the nursing home sector. I find that higher minimum wages increase income and tenure for low-wage employees while improving consumer outcomes, measured by fewer inspection violations; lower rates of adverse, preventable health conditions; and lower resident mortality. Firms avoid lower profitability by attracting patients with a greater ability to pay and increasing prices for these consumers.