https://macropaperwarehouse.com/authors/nirupama-l-rao/Nirupama L RaoHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/whos-afraid-of-the-minimum-wage-measuring-the-impacts-on-independent-businesses-using-matched-u.s.-tax-returns/https://macropaperwarehouse.com/papers/whos-afraid-of-the-minimum-wage-measuring-the-impacts-on-independent-businesses-using-matched-u.s.-tax-returns/<p><strong>Research Question</strong></p> <p>This paper asks how independent (pass-through) businesses in the United States accommodate minimum wage increases — specifically whether they reduce employment, compress profits, pass costs through to customers, or exit — and what happens to the low-earning workers and business owners affected by these adjustments.</p> <p><strong>Data and Methodology</strong></p> <p>The authors construct a novel linked firm-worker-owner panel dataset from the universe of U.S. tax returns, covering approximately 235,000 pass-through firms (S-corporations, partnerships, and LLCs) per year in highly exposed industries over 2010–2019. &ldquo;Highly exposed&rdquo; industries are defined as those where at least 15% of workers earned below the full-time equivalent of the federal minimum wage ($15,080 per year) in 2013. The dataset links annual business income tax returns to the individual income tax returns and W-2 information reports of all workers and owners.</p>