capital-intensive than exiting firms, etc.) Aaronson et al. (2018) find that following a minimum wage hike, both firm entry and exit rise in the restaurant industry, and that there is no change in employment among continuing restaurants. The authors argue these effects are consistent with a model where continuing restaurants cannot change employment and thus industry-level adjustment occurs through the (endogenous) exit of labor-intensive restaurants and entry of capital-intensive ones. The long-run employment elasticity implied by this model is 3 to 5 times greater than the short-run one (the short-run disemployment elasticity is estimated at _−_ 0.1, given that entry and exit results roughly offset the effects on net employment). The model extends Sorkin (2015) allowing for endogenous firm exit. Hurst et al. (2022) use a putty-clay technology model to study the (long-run) welfare impact of different policies on low-wage individuals. The authors find within the lenses of the model that minimum wage has a small employment effect in the short run, but a larger negative one in the long run (with adverse welfare consequences).

In addition, most evidence on employment outcomes focuses on for-profit employers. Meer and Tajali (2023) highlight how the nonprofit sector’s ability to absorb increases in labor costs differs from the for-profit sector. They estimate a negative impact on employment for US states with large statutory minimum wage increases.

For LMICs results are similar. Studies for Brazil, China, Colombia, Costa Rica, Nicaragua, and Thailand have found adverse but modest employment effects of minimum wage regulation (as reviewed by Betcherman, 2012a); while studies for Mexico and South Africa have found no overall employment impact (Betcherman, 2012a). In a methodologically similar exercise, Broecke et al. (2017) perform both a qualitative and quantitative literature review with evidence from 14 emerging economies and reach similar results: minimum wages have only a minimal impact on employment. Interestingly, Broecke et al. (2017) find evidence of reporting bias toward statistically significant negative employment results.

However, other reviews focusing on LMICs provide less clear-cut results (Belman and Wolfson, 2016). Ten of the studies reviewed show the employment effects found using firm/establishment data vary substantially. The results range from negative employment effects—with one study reporting an employment elasticity among surviving firms of _−_ 0.13—to positive ones, with a second study showing positive employment effects for new firms and no aggregate effects at the metropolitan level. Another study reviewed reports heterogeneity across firms depending on their size, by showing evidence of a total employment decline in small firms and an employment increase in large firms. Using instead household data to study employment effects, one other study finds that a rise in the minimum wage might translate into lower employment and some employment might reallocate from big to smaller firms that are not complying with minimum wage regulations (potentially rising informal employment). The authors of that study also find that sectors more likely to comply with regulations saw a decline in employment and those less likely to comply found no employment effect. Other studies found no effects on employment at all.

Across single-country studies, most of the evidence points to minimal aggregate employment effects. Engbom and Moser (2022) find a muted aggregate employment effect of the Brazilian minimum wage (the model predicts aggregate employment to decrease by 0.7%), given that workers in affected 44