Absenteeism and Minimum Wages: Evidence from the CPS-MORG

Abstract

Some proponents of higher minimum wages cite reduced absenteeism as a positive side-effect. However, little evidence on the relationship between minimum wages and absenteeism exists for the United States. This paper examines the effect of minimum wages on absenteeism using data from the Merged Outgoing Rotation Groups of the Current Population Survey for the years 1979-2007 (CPS-MORG). We estimate a negative relationship between minimum wages and absenteeism for men, but a positive relationship for women. We consider three possible explanations for the positive estimated effects for women: selection, wage-constrained hedonic equilibrium, and differential costs of absenteeism. The evidence is inconsistent with the selection story, and most easily reconciled with the differential cost story.

Keywords: minimum wages, absenteeism

JEL Classification: J22, J32, J38