The Minimum Wage Puzzle and the Role of Social Preferences

Last registered on December 19, 2022

Pre-Trial

Trial Information

General Information

Title
The Minimum Wage Puzzle and the Role of Social Preferences
RCT ID
AEARCTR-0009834
Initial registration date
August 25, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
August 25, 2022, 2:32 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
December 19, 2022, 6:07 PM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation

Other Primary Investigator(s)

PI Affiliation
University of British Columbia
PI Affiliation
University College London
PI Affiliation
London School of Economics

Additional Trial Information

Status
On going
Start date
2022-08-25
End date
2022-12-24
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
A vast and growing number of studies suggests that minimum wages have limited disemployment effects while they can increase output prices. This finding contradicts the “law of demand” which states that demand should fall whenever prices increase, and so the scale of production and employment. We propose a simple mechanism whereby, all else equal, consumers derive a higher marginal utility from consuming a good if it is produced by workers with a higher wage provided the minimum wage relative to the markup is not too high. Combined with firms’ inability to credibly commit to higher wages, a mandated minimum wage policy could then lead to higher output and positive employment effects simultaneously. To test this mechanism, we run a survey in which we present individuals with different scenarios resulting in a price increase. We then ask individuals whether they consider the price increase to be fair or unfair and whether they are more or less willing to pay the higher price.
External Link(s)

Registration Citation

Citation
Becker, Anna et al. 2022. "The Minimum Wage Puzzle and the Role of Social Preferences." AEA RCT Registry. December 19. https://doi.org/10.1257/rct.9834-3.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-08-25
Intervention End Date
2022-12-24

Primary Outcomes

Primary Outcomes (end points)
Perceived fairness, willingness to buy
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Subjects will be randomly assigned to one of the treatments which vary the reason for an increase in the price for a product. Subjects will then be asked if they consider the price increase to be fair and whether they are more or less likely to purchase items from the same shop following the price increase. 
Experimental Design Details
Randomization Method
Randomization done by computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
n/a
Sample size: planned number of observations
3000 2700 (in Round 3)
Sample size (or number of clusters) by treatment arms
500
300 (in Round 3)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
UBC Research Ethics Board
IRB Approval Date
2022-08-11
IRB Approval Number
H22-02191
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
No
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials