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Research papers on The minimum wage and jobs

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  1. The Effect of Minimum Wages on Low-Wage Jobs*

    Doruk Cengiz, Arindrajit Dubé, Attila Lindner, et al. · 2019 · The Quarterly Journal of Economics · 2,561 citations

    Abstract We estimate the effect of minimum wages on low-wage jobs using 138 prominent state-level minimum wage changes between 1979 and 2016 in the United States using a difference-in-differences approach. We first estimate the effect of the minimum wage increase on employment changes by wage bins throughout the hourly wage distribution. We then focus on the bottom part of the wage distribution and compare the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it to infer the employment effect. We find that the overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the d

  2. Trends in U.S. Wage Inequality: Revising the Revisionists

    David Autor, Lawrence F. Katz, Melissa S. Kearney · 2008 · The Review of Economics and Statistics · 2,410 citations

    A recent “revisionist” literature characterizes the pronounced rise in U.S. wage inequality since 1980 as an “episodic” event of the first half of the 1980s driven by nonmarket factors (particularly a falling real minimum wage) and concludes that continued increases in wage inequality since the late 1980s substantially reflect the mechanical confounding effects of changes in labor force composition. Analyzing data from the Current Population Survey for 1963 to 2005, we find limited support for these claims. The slowing of the growth of overall wage inequality in the 1990s hides a divergence in the paths of upper-tail (90/50) inequality—which has increased steadily since 1980, even adjusting

  3. Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties

    Arindrajit Dubé, T. William Lester, Michael Reich · 2010 · The Review of Economics and Statistics · 1,229 citations

    We use policy discontinuities at state borders to identify the effects of minimum wages on earnings and employment in restaurants and other low-wage sectors. Our approach generalizes the case study method by considering all local differences in minimum wage policies between 1990 and 2006. We compare all contiguous county pairs in the United States that straddle a state border and find no adverse employment effects. We show that traditional approaches that do not account for local economic conditions tend to produce spurious negative effects due to spatial heterogeneities in employment trends that are unrelated to minimum wage policies. Our findings are robust to allowing for long-term effect

  4. Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws

    David Neumark, William Wascher · 1992 · Industrial and Labor Relations Review · 606 citations

    Using panel data on state minimum wage laws and economic conditions for the years 1973–89, the authors reevaluate existing evidence on the effects of a minimum wage on employment. Their estimates indicate that a 10% increase in the minimum wage causes a decline of 1–2% in employment among teenagers and a decline of 1.5–2% in employment for young adults, similar to the ranges suggested by earlier time-series studies. The authors also find evidence that youth subminimum wage provisions enacted by state legislatures moderate the disemployment effects of minimum wages on teenagers.

  5. Effects of the Minimum Wage on Employment Dynamics

    Jonathan Meer, Jeremy West · 2015 · The Journal of Human Resources · 443 citations

    The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. We argue that the minimum wage will impact employment over time, through changes in growth rather than an immediate drop in relative employment levels. We show that commonly-used specifications in this literature, especially those that include state-specific time trends, will not accurately capture these effects. Using three separate state panels of administrative employment data, we find that the minimum wage reduces job growth over a period of several years. This finding is supported using several empirical specifications.

  6. The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the U.K. Wages Councils

    Stephen Machin, Alan Manning · 1994 · Industrial and Labor Relations Review · 237 citations

    Using data on Wages Council coverage from the United Kingdom New Earnings Survey, the authors examine the impact of mandated minimum wages on wage dispersion and employment in the United Kingdom in the 1980s. They find evidence that a dramatic decline in the toughness of the regulation imposed by the Wages Councils through the 1980s—a decline, that is, in the level of the minimum wage relative to the average wage—significantly contributed to widening wage dispersion over those years. There is, however, no evidence of an increase in employment resulting from the weakening bite of the Wages Council minimum pay rates. Instead, consistent with the conclusions of several recent U.S. studies, the

  8. Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata

    Mario Bossler, H. Gerner · 2019 · ILR Review · 123 citations

    The authors present the first evidence on the consequences of the new statutory minimum wage in Germany, which was implemented on January 1, 2015. Using the IAB Establishment Panel, they identify employment effects from variation in the extent that establishments are affected by the minimum wage. A difference-in-differences estimation reveals an increase in average wages between 3.8% and 6.3% and an employment loss by approximately 1.7% in establishments affected by the minimum wage. These estimates imply a labor demand elasticity with respect to wages ranging between −0.2 and −0.4. The authors also observe a transitory reduction of the working hours in the first year after the introduction

  9. Minimum Wage Employment Effects and Labor Market Concentration

    Jose Azar, Jose Azar, Emiliano Huet-Vaughn, et al. · 2019 · SSRN Electronic Journal · 115 citations

    Why is the employment effect of the minimum wage frequently found to be close to zero? Theory tells us that when wages are below marginal productivity, as with monopsony, employers are able to increase wages without laying off workers, but systematic evidence directly supporting this explanation is lacking. In this paper, we provide empirical support for the monopsony explanation by studying a key low-wage retail sector and using data on labor market concentration that covers the entirety of the United States with fine spatial variation at the occupation-level. We find that more concentrated labor markets – where wages are more likely to be below marginal productivity – experience significan

  10. The short-run employment effects of the German minimum wage reform

    Marco Caliendo, Alexandra Fedorets, Malte Preuss, et al. · 2018 · Labour Economics · 108 citations

    We assess the short-term employment effects of the introduction of a national statutory minimum wage in Germany in 2015. For this purpose, we exploit variation in the regional treatment intensity, assuming that the stronger a minimum wage "bites" into the regional wage distribution, the stronger the regional labour market will be affected. In contrast to previous studies, we draw upon detailed individual wage data from the Structure of Earnings Survey (SES) 2014 and combine it with administrative information on regional employment. Moreover, using the Socio-Economic Panel (SOEP), we are able to affirm the absence of anticipation effects and verify the assumption of a common trend in wages be

  11. Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle

    Ekaterina Jardim, M. Long, R. Plotnick, et al. · 2022 · American Economic Journal: Economic Policy · 101 citations

    Seattle raised its minimum wage to as much as $11 in 2015 and as much as $13 in 2016. We use Washington State administrative data to conduct two complementary analyses of its impact. Relative to outlying regions of the state identified by the synthetic control method, aggregate employment at wages less than twice the original minimum—measured by total hours worked—declined. A portion of this reduction reflects jobs transitioning to wages above the threshold; the aggregate analysis likely overstates employment effects. Longitudinal analysis of individual Seattle workers matched to counterparts in outlying regions reveals no change in the probability of continued employment but significant red

  13. Minimum Wage Employment Effects and Labour Market Concentration

    José Azar, Emiliano Huet-Vaughn, Ioana Marinescu, et al. · 2023 · The Review of Economic Studies · 66 citations

    Abstract This paper shows that more highly concentrated labour markets experience more positive employment effects of the minimum wage. In the most concentrated labour markets, employment rises following a minimum wage increase. The paper establishes its main findings by studying the effects of local minimum wage increases on a key low-wage retail sector, and using data on labour market concentration that covers the entirety of the U.S. with fine spatial variation at the occupation level. The results carry over to the fast-food sector and the entire low-wage labour market and are robust to using proxies of labour market concentration available for a broader range of industries, such as the n

  14. Employment effects of introducing a minimum wage: The case of Germany

    Oliver Holtemöller, F. Pohle · 2020 · Economic Modelling · 42 citations

    This paper contributes to the empirical literature on the employment effects of minimum wages. We analysed the introduction of a statutory minimum wage in Germany in 2015 exploiting cross-sectional variation of the minimum wage affectedness. We construct two variables that measure the affectedness for approximately 300 state-industry combinations based on aggregate monthly income data. The estimation strategy consists of two steps. We test for (unidentified) structural breaks in a model with cross-section specific trends to control for state-industry specific developments prior to 2015. In a second step, we test whether the trend deviations are correlated with the minimum wage affectedness.

  16. The new German statutory minimum wage in comparative perspective: Employment effects and other adjustment channels

    Oliver Bruttel, Arne Baumann, Matthias Dütsch · 2018 · European Journal of Industrial Relations · 31 citations

    Germany was one of only seven EU member states without a statutory minimum wage before its new legislation took effect in January 2015. We explore the consequences for wage structure, employment and companies. The new wage floor brought significant increases for low-paid employees, with limited observable negative employment effects thus far. To explain these benign outcomes, we refer to institutionalist and behavioural theories and discuss a number of other adjustment channels for companies. Preliminary evidence suggests that companies in sectors highly affected have responded by reducing working hours and/or increasing work intensity and prices. Some have cut special payments and non-wage

  19. Employment effects of the minimum wage: evidence from the Spanish 2019 reform

    Lucía Gorjón, David Martinez de Lafuente, Gonzalo Romero · 2023 · SERIEs · 15 citations

    We examine the employment effects of the 2019 minimum wage increase in Spain on individual probabilities of losing employment status (extensive margin) and lowering work intensity (intensive margin). To do so, we use variation of workers’ exposure to the reform by comparing monthly employment transitions into unemployment and reductions in number of working hours between employees earning less than the minimum wage (treatment group) and those earning more and that should therefore be unaffected by the reform (control group). We find that the new minimum wage significantly increased the probability of experiencing unemployment (1.7 percentage points) and a reduction in work intensity (0.9 per

  20. Using Occupations to Evaluate the Employment Effects of the German Minimum Wage

    M. Friedrich · 2019 · Jahrbücher für Nationalökonomie und Statistik · 15 citations

    Abstract This paper evaluates the short to medium run employment effects of the 2015 introduction of a statutory minimum wage in Germany. The effect of the policy is recovered from variation in the bite of the minimum wage across occupations using a difference-in-differences estimator. The analysis reveals that the reform only had a small impact on employment and highlights the importance of regional effect heterogeneity. In East Germany, marginal employment decreased by about 18,000 jobs in the short run and 52,000 jobs in the medium run, respectively, due to the minimum wage. In West Germany, no negative employment effects are detectable, but regular employment increased temporarily becaus

  22. Minimum wage standard adjustment and employment: Heterogeneity effects on the human capital investment

    Lin Ling, Hayat Khan, Qianqian Liu, et al. · 2024 · Heliyon · 11 citations

    Considerable debate has arisen around the potential effects of increasing the minimum wage on employment. This study aims to analyze the impact of changes in China's minimum wage standard on employment. The research utilises the canonical model method and constructs a regression model based on standard labor economics theory. The analysis is conducted using sample data from Chinese industrial enterprises between 2000 and 2007. Regression analysis is performed by categorizing enterprises based on their level of human capital investment. The findings indicate that minimum wage increases have a non-linear impact on employment, when seen from the standpoint of human capital investment. When the

  24. MINIMUM WAGE EFFECTS ON PERMANENT VERSUS TEMPORARY MINIMUM WAGE EMPLOYMENT

    MICHELE CAMPOLIETI, MORLEY GUNDERSON, BYRON LEE · 2014 · Contemporary Economic Policy · 9 citations

    We estimate the effect of minimum wages on employment using the Master Files of the Canadian Labour Force Survey over the recent period 1997–2008. Particular attention is paid to the differences between permanent and temporary minimum wage workers—an important distinction not made in the existing literature. Our estimates for permanent and temporary minimum wage workers combined are at the lower end of estimates based on Canadian studies estimated over earlier time periods, suggesting that the adverse employment effects are declining over time for reasons discussed. Importantly, the adverse employment effects are substantially larger for permanent compared to temporary minimum wage workers;

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