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The Effect of Minimum Wages on Labour Market Outcomes: County-Level Estimates from the Restaurant-and-Bar Sector

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Author Info

  • John T. Addison
  • McKinley L. Blackburn
  • Chad D. Cotti

Abstract

We use county-level data on employment and earnings in the restaurant-and-bar sector to evaluate the impact of minimum wage changes on low-wage labor markets. Our empirical approach is similar to the literature that has used state-level panel data to estimate minimum-wage impacts, with the difference that we focus on a particular sector rather than demographic group. Our estimated models are consistent with a simple competitive model of the restaurant-and-bar labor market in which supply-and-demand factors affect both the equilibrium outcome and the probability that a minimum wage will be binding in any given time period. Our evidence does not suggest that minimum wages reduce employment in the overall restaurant-and-bar sector, after controls for trends in sector employment at the county level are incorporated in the model. Employment in this sector appears to exhibit a downward long-term trend in states that have increased their minimum wages relative to states that have not, thereby predisposing fixed-effects estimates towards finding negative employment effects.

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File URL: http://hdl.handle.net/10.1111/j.1467-8543.2010.00819.x
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Bibliographic Info

Article provided by London School of Economics in its journal British Journal of Industrial Relations.

Volume (Year): 50 (2012)
Issue (Month): 3 (09)
Pages: 412-435

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Handle: RePEc:bla:brjirl:v:50:y:2012:i:3:p:412-435

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Cited by:
  1. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2011. "Minimum Wage Increases in a Soft U.S. Economy," Economics Series 273, Institute for Advanced Studies.
  2. David Neumark & J.M. Ian Salas & William Wascher, 2013. "Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?," NBER Working Papers 18681, National Bureau of Economic Research, Inc.
  3. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2013. "Minimum wage increases in a recessionary environment," Labour Economics, Elsevier, vol. 23(C), pages 30-39.
  4. Holmlund, Bertil, 2013. "What do labor market institutions do?," Working Paper Series, Center for Labor Studies 2013:14, Uppsala University, Department of Economics.
  5. Hirsch, Barry & Kaufman, Bruce E. & Zelenska, Tetyana, 2011. "Minimum Wage Channels of Adjustment," IZA Discussion Papers 6132, Institute for the Study of Labor (IZA).
  6. Addison, John T. & Ozturk, Orgul Demet, 2010. "Minimum Wages, Labor Market Institutions, and Female Employment and Unemployment: A Cross-Country Analysis," IZA Discussion Papers 5162, Institute for the Study of Labor (IZA).
  7. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad, 2011. "Minimum Wage Increases Under Straightened Circumstances," IZA Discussion Papers 6036, Institute for the Study of Labor (IZA).
  8. Dube, Arindrajit & Lester, T. William & Reich, Michael, 2012. "Minimum Wage Shocks, Employment Flows and Labor Market Frictions," Institute for Research on Labor and Employment, Working Paper Series qt76p927ks, Institute of Industrial Relations, UC Berkeley.
  9. Dube, Arindrajit & Lester, T. William & Reich, Michael, 2013. "Minimum Wage Shocks, Employment Flows and Labor Market Frictions," Institute for Research on Labor and Employment, Working Paper Series qt27z0006g, Institute of Industrial Relations, UC Berkeley.

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