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Do State Minimum Wage Laws Reduce Employment? Mixed Messages from Fast Food Outlets in Illinois and Indiana

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  • Persky, Joseph J.
  • Baiman, Ron

Abstract

In January 2004 and January 2005 the state of Illinois increased its minimum wage to $5.50 and then $6.50, well above the national minimum of $5.15. This study, comparing the impacts on Illinois fast food outlets to a control group of Indiana outlets, was conceived as a repetition of the Card-Krueger study of a similar situation in New Jersey. The central question is whether the Illinois outlets demonstrated a substantial reduction in employment in response to the higher legislated wage rates. We conclude that the Illinois-Indiana data lack the power to differentiate between a "zero employment effect" and a "small negative employ-ment effect." Furthermore, we question the welfare significance of such a determination even if it could be convincingly made.

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Bibliographic Info

Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

Volume (Year): 40 (2010)
Issue (Month): 2 ()
Pages:

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Handle: RePEc:ags:jrapmc:132449

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Related research

Keywords: Food Security and Poverty; Labor and Human Capital;

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  1. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
  2. Elizabeth Powers, 2009. "The Impact of Minimum-Wage Increases: Evidence from Fast-food Establishments in Illinois and Indiana," Journal of Labor Research, Springer, vol. 30(4), pages 365-394, December.
  3. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
  4. Joseph Persky & Daniel Felsenstein & Virginia Carlson, 2004. "Does "Trickle Down" Work? Economic Development and Job Chains in Local Labor Markets," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number dtdw.
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