Minimum Wage Effects on Hours, Employment and Number of Firms: The Iowa Case
AbstractResearch on Iowa low-wage retail and service industries supports the view that minimum wages lower employment opportunities for workers. The sample period includes three successive changes in the Iowa minimum wage in 1990, 1991, and 1992, during which time the Iowa rate exceeded the federal minimum wage and that of its surrounding states. Firm-level longitudinal data which separated sub- from superminimum workers yielded employment demand elasticities ranging from -0.3 to -0.7. Hours elasticities were even larger, implying that the increases in minimum wages lowered earnings for subminimum workers. These findings are corroborated by analysis of county-level, two-digit industry data. Minimum wages also reduced the number of firms, but increased average firm size in these industries.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 4053.
Date of creation: 01 Jan 2002
Date of revision:
Publication status: Published in Journal of Labor Research, Winter 2002, vol. 23 no. 1, pp. 3-23
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Other versions of this item:
- 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.
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