Nonlinearities in employment response could arise because there are costs associated with changing the way goods and services are produced

Paraphrase and summarise ‘Nonlinearities in employment response could arise because there are costs associated with changing the way goods and services are produced—e.g., capital investments are often required to substitute away from labor—that may not make sense to incur in the face of relatively small increases in labor costs from modest minimum wage increases, but that may be worth incurring when the minimum wage is substantially increased. In a series of papers, Clemens and Strain (e.g., 2017, 2020a) study the employment effects of minimum wage increases following the Great Recession using a (pre-committed) research design that allows for nonlinearities. Clemens and Strain (2020a) report that seven states increased their minimum wages by $2.50 or more in the years spanning 2013 to 2018. They classify these as large increases. Sixteen states increased their minimum wages by less than $2.50. Call these smaller increases. Among workers with relatively fewer skills (workers up to age 25 with educational attainment less than a high school diploma), Clemens and Strain (2018; 2020a) find that large minimum wage increases lead to employment reductions of three percentage points. Among younger workers (workers up to age 21), they find employment reductions of around two percentage points. These are sizable employment losses. In addition to evidence of meaningful employment loss, Clemens and Strain (2018; 2020a) also find substantial nonlinearities in the employment effect of minimum wage increases. Smaller increases are associated with near-zero employment losses (a 0.2 percentage point reduction) among lesser-skilled workers. The magnitude of the employment effect of smaller increases for younger workers is roughly half that of larger increases’