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The Elusive Employment Effect of the Minimum Wage

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  • Alan Manning

Abstract

It is hard to find a negative effect on the employment effect of rises in the minimum wage: the elusive employment effect. It is much easier to find an impact on wages. This paper argues the elusive employment effect is unlikely to be solved by better data, methodology, or specification. The reasons for the elusive employment effect are the factors contributing to why the link between higher minimum wages and higher labor costs are weaker than one might think and because imperfect competition is pervasive in the labor market.

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  • Alan Manning, 2021. "The Elusive Employment Effect of the Minimum Wage," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 3-26, Winter.
    • Handle: RePEc:aea:jecper:v:35:y:2021:i:1:p:3-26
    DOI: 10.1257/jep.35.1.3
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    More about this item

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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