Abstract:
Minimum wage increases are often accompanied by firms raising qualification requirements in job postings, but whether this skill upgrading reflects changes in who applies (composition effects) or changes in whom firms select from an unchanged applicant pool (selection effects) remains unclear. Using unique data from a large online job platform in China that links job postings, applications, and job offers, we compare firm hiring practices and applicant pools before versus after province-level minimum wage increases, treated versus control provinces, and minimum-wage versus higher-wage occupations. We find that firms raise educational requirements in postings by 3-4 percentage points and increase job offers to college-educated workers by 30\%, while offers to less-educated workers remain unchanged. At the same time, the application volumes and applicant characteristics remain unchanged. This pattern reveals that the shift in job offers occurs entirely through the selection effect, as the short-run labor supply response is limited even when firms actively attempt to reshape their applicant pools. Minimum wage increases thus redistribute employment opportunities among existing job seekers away from less educated workers.
