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Employment effects of minimum and subminimum wages: reply to Card, Katz, and Krueger

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  • David Neumark
  • William Wascher

Abstract

In Neumark and Wascher (1992), we present findings supporting the earlier consensus that minimum wages reduce employment for teens and young adults, with elasticities in the range -0.1 to -0.2. In addition, we find that subminimum wages moderate these disemployment effects. Card, Katz and Krueger (1993) criticize numerous aspects of our analysis, and contest our conclusions. This reply presents an assessment of their arguments, as well as additional evidence related to some of the criticisms that they raise. We conclude that the issues raised by Card, et al., upon further examination, do not alter the conclusions from our original paper, and in some cases even reinforce those conclusions.

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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Working Paper Series / Economic Activity Section with number 144.

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Date of creation: 1993
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Handle: RePEc:fip:fedgwe:144

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Keywords: Employment (Economic theory) ; Wages;

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Cited by:
  1. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad, 2008. "The Effect of Minimum Wages on Wages and Employment: County-Level Estimates for the United States," IZA Discussion Papers 3300, Institute for the Study of Labor (IZA).
  2. Marianne E. Page & Joanne Spetz & Jane Millar, 2005. "Does the minimum wage affect welfare caseloads?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 273-295.
  3. Luttmer, Erzo F.P., 2007. "Does the Minimum Wage Cause Inefficient Rationing?," IZA Discussion Papers 2713, Institute for the Study of Labor (IZA).
  4. Natalya Y. Shelkova, 2008. "Low-wage labor markets amd the power of suggestion," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 1112, Princeton University, Department of Economics, Industrial Relations Section..
  5. Pia M. Orrenius & Madeline Zavodny, 2008. "The effect of minimum wages on immigrants' employment and earnings," Working Papers, Federal Reserve Bank of Dallas 0805, Federal Reserve Bank of Dallas.
  6. Mark D. Brenner, 2004. "The Economic Impact of Living Wage Ordinances," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp80, Political Economy Research Institute, University of Massachusetts at Amherst.
  7. David Neumark & William Wascher, 1994. "Minimum Wage Effects and Low-Wage Labor Markets: A Disequilibrium Approach," NBER Working Papers 4617, National Bureau of Economic Research, Inc.
  8. Laura Giuliano, 2007. "Minimum wage effects on employment, substitution, and the quality of the teenage labor supply: Evidence from personal data," Working Papers, University of Miami, Department of Economics 0723, University of Miami, Department of Economics.

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