Who pays for and who benefits from minimum wage increases? Evidence from Israeli tax data on business owners and workers

A key goal of a higher minimum wage is income redistribution towards low-income families. Existing research on the focuses impact affected workers, but silent incomes owners businesses who pay for wage. Higher wages will do more to redistribute if are nearer top distribution, and vice versa. We study evidence incidence business using unique administrative dataset universe tax records Israel, in period surrounding large increase. find that hike reduced profits companies, with minimum-wage intensive companies bearing bulk cost adjusting their workforces aggressively. Notably, declined lower-income owners. Moreover, shares workers ranked at bottom distribution In addition, spouses earn less than while have earning spouses, further reducing redistributive effect