The effect of minimum wage increases on firm productivity

This paper researches the effect of minimum wages on the hygiene quality of restaurants empirically. We use exogenous increases in the minimum wage to identify the effect. The hygiene effect for the entire sample is negative and insignificant but the 25% best scoring restaurants in terms of hygiene score show a significant deterioration in hygiene score due to minimum wage increases. The effect is small: a dollar increase in the minimum wage lowers the hygiene score by 5% of a standard deviation. The effect of minimum wages on hygiene is interesting because minimum wages are common and hygiene is an important quality aspect for consumers.