Research 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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Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
4053.
Length: Date of creation: 01 Mar 1999 Date of revision: Publication status: Published in Journal of Labor Research, Winter 2002, Vol. 23, No. 1, pp. 3-23. Handle: RePEc:isu:genres:4053
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Find related papers by JEL classification: J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs R3 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location
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