Acemoglu and Pischke offer a reasonable explanation. Though economics textbooks may speak of labor markets as "perfectly competitive," in the actual world markets are far from perfect. Employers, for example, often face trouble filling vacancies, motivating their workers, and retaining their best workers even when they pay higher wages. So raising the minimum wage can lead employers to invest more in the skills of their employees. It sometimes can be more profitable for employers to train workers up to their new wage level than to look for new workers.