Gustafson, Matthew and Kotter, Jason D., Minimum Wage and Corporate Policy (January 2017). Available for download at SSRN: https://ssrn.com/abstract=2914598

“We provide evidence that minimum wage changes significantly affect the investment and financing policies of labor intensive public firms. Our identification strategy exploits cross-state and intertemporal variation in whether a state’s minimum wage is bound by the federal minimum wage. Difference-in-differences estimates indicate that labor intensive firms in bound state-years respond to federal minimum wage increases by quickly and significantly reducing both investment and leverage, relative to similar labor intensive firms in other states. These findings persist in a triple differencing specification that uses non-labor intensive firms to control for differences in state-level economic conditions.”