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State minimum wages and business location: Evidence from a refined border approach

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  • Rohlin, Shawn M.

Abstract

This study examines the effect of state minimum wage changes on new and existing business establishments. It employs a refined border approach in conjunction with other differencing methods to control for unobserved heterogeneous area characteristics. The findings suggest that state minimum wage increases deter new establishments from locating in an area, particularly in industries that rely on low-education workforces, such as the retail and manufacturing industries. However, existing establishments, regardless of industry type, are not found to be adversely affected by minimum wage policy.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 69 (2011)
Issue (Month): 1 (January)
Pages: 103-117

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Handle: RePEc:eee:juecon:v:69:y:2011:i:1:p:103-117

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Web page: http://www.elsevier.com/locate/inca/622905

Related research

Keywords: Minimum wage Spatial differencing Borders Business location;

References

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  1. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2008. "Dots to boxes: Do the size and shape of spatial units jeopardize economic geography estimations?," PSE Working Papers halshs-00586029, HAL.
  2. Neumark, David & Wascher, William, 2007. "Minimum Wages and Employment," IZA Discussion Papers 2570, Institute for the Study of Labor (IZA).
  3. Gilles Duranton & Laurent Gobillon & Henry G. Overman, 2011. "Assessing the Effects of Local Taxation using Microgeographic Data," Economic Journal, Royal Economic Society, vol. 121(555), pages 1017-1046, 09.
  4. William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
  5. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
  6. Peter F. Orazem & J. Peter Mattila, 2002. "Minimum Wage Effects on Hours, Employment, and Number of Firms: The Iowa Case," Journal of Labor Research, Transaction Publishers, vol. 23(1), pages 3-23, January.
  7. Charles Brown & Curtis Gilroy & Andrew Kohen, 1982. "The Effect of the Minimum Wage on Employment and Unemployment: A Survey," NBER Working Papers 0846, National Bureau of Economic Research, Inc.
  8. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
  9. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 56, Center for Policy Research, Maxwell School, Syracuse University.
  10. J. Vernon Henderson & Mohammad Arzaghi, 2005. "Networking Off Madison Avenue," Working Papers 05-15, Center for Economic Studies, U.S. Census Bureau.
  11. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  12. Larry D. Singell & James R. Terborg, 2007. "Employment Effects Of Two Northwest Minimum Wage Initiatives," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 40-55, 01.
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Citations

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Cited by:
  1. Amanda Ross & Shawn Rohlin, 2013. "State Bankruptcy Law and Entrepreneurship: Evidence from a Border Analysis," ERSA conference papers ersa13p253, European Regional Science Association.
  2. Dhar, Paramita & Ross, Stephen L, 2012. "School district quality and property values: Examining differences along school district boundaries," Journal of Urban Economics, Elsevier, vol. 71(1), pages 18-25.
  3. Aaronson, Daniel & French, Eric & Sorkin, Isaac, 2013. "Firm Dynamics and the Minimum Wage: A Putty-Clay Approach," Working Paper Series WP-2013-26, Federal Reserve Bank of Chicago.
  4. Jan Fidrmuc & J. D. Tena, 2013. "National minimum wage and employment of young workers in the UK," Discussion Papers 12, Central European Labour Studies Institute (CELSI).

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