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  5. Firm Structure and Labor Standards
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Firm Structure and Labor Standards

Paper Session

Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)

Philadelphia Convention Center
Hosted By: American Economic Association
  • Chair: Gonçalo Costa, Harvard University

Franchising and Labor Standards Compliance in the Fast-Food Industry

Gonçalo Costa
,
Harvard University
Daniel Schneider
,
Harvard University
David Weil
,
Brandeis University and Harvard University

Abstract

Over the past decades, the American labor market has been transformed by increasing fissuring and a break-down of traditional employment relations, raising the specter of workers losing the protections of core labor standards.  One common model of fissured work is franchising, found broadly in the economy but especially in the food service.  Theory and prior evidence suggest that this form of fissuring may lead to non-compliance with labor standards, but limited data on franchise structure and direct measurement of violations has proved an impediment to research on this topic.  We use novel employer-employee linked survey data on labor standards violations combined with administrative data on franchise density to investigate how franchising affects compliance with labor standards in the fast-food industry. We find that companies with a greater density of franchise establishments exhibit significantly higher rates of labor law violations. The effects are particularly pronounced for newer workplace regulations, such as fair workweek and paid sick leave laws. These findings are robust across specifications with varying measures of franchise status and confounding factors. Furthermore, we employ event study analyses examining differential compliance patterns around the implementation of fair workweek, paid sick leave, and minimum wage requirements. Our results carry implications for the strategic targeting of labor standards enforcement.

Spillovers from Sectoral Bargaining: Evidence from California's $20 Fast Food Minimum Wage

Agustín Barboza
,
Princeton University
Ellora Derenoncourt
,
Princeton University

Abstract

We explore the direct and spillover effects of California's $20 minimum wage in the fast food sector. The wage hike applied to limited-service, immediate consumption restaurant chains with at least 60 establishments nationwide. We use payroll data to assess the effects of the policy on wages and employment of covered firms as well as their spillover effects to uncovered firms based on sector (fast food versus other service and retail) and firm structure (franchise vs. non-franchise and multi- versus single establishment firms). We use data on local labor market characteristics, such as tightness and concentration, and employment flows across sectors to explore potential channels for transmission to non-covered firms.

Just Cause Protection Under Manager Discrimination

Joseph Pickens
,
United States Naval Academy
Aaron Sojourner
,
W. E. Upjohn Institute for Employment Research

Abstract

Just cause policies aim to discourage the arbitrary firing of employees. Recent efforts
at passing such laws in the U.S. have been motivated by deterring discrimination. This
paper presents a framework to study the effects of just cause when managers engage
in taste-based discrimination. Under biased managers, one would expect to see sep-
arations of disfavored workers concentrated in the initial probationary period, before
workers are covered by the just cause protection. Since probationary periods are a typ-
ical feature of protections, the approach is generalizable. We test this prediction using
New York City’s 2021 just cause law for fast-food employees, and a synthetic difference-
in-differences design on publicly-available data. We do not find results consistent with
taste-based discrimination against black, Hispanic, female, nor older workers, though
lack of enforcement or data issues could drive the nulls. Further analysis suggests
another mechanism: screening discrimination against younger workers.

Corporate Minimum Wages and Working Poverty

Soohyun Roh
,
Massachusetts Institute of Technology
Jiawei Tang
,
Massachusetts Institute of Technology
Nathan Wilmers
,
Massachusetts Institute of Technology

Abstract

Starting in 2014, many large retail employers adopted voluntary corporate minimum wages. These minimums provided a wage floor affecting millions of workers. Novel employer-linked household panel data allow us to study how these employer wage-setting decisions affect working poverty.  Minimums reduce poverty rates in adopting firms by 30% to 50%, relative to workers in similar jobs, labor markets and competitor employers. Minimums also narrow black/white, college/non-college, regional, and gender wage gaps within firms.  Poverty reduction is not explained by shifting worker selection, pre-trends, or offsetting decreases in hours or health insurance.  However, adopters employ more college-educated workers and intensify work.

Discussant(s)
Gonçalo Costa
,
Harvard University
Ellora Derenoncourt
,
Princeton University
Nathan Wilmers
,
Massachusetts Institute of Technology
Joseph Pickens
,
United States Naval Academy
JEL Classifications
  • J8 - Labor Standards: National and International
  • L1 - Market Structure, Firm Strategy, and Market Performance