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The Minimum Wage and Latino Workers

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Author Info

  • Orrenius, Pia M.

    ()
    (Federal Reserve Bank of Dallas)

  • Zavodny, Madeline

    ()
    (Agnes Scott College)

Abstract

Latinos comprise a large and growing share of the low-skilled labor force in the U.S. and may be disproportionately affected by minimum wage laws as a result. We compare the effects of minimum wage laws on employment and earnings among Hispanic immigrants and natives compared with non-Hispanic whites and blacks. We focus on adults who have not finished high school and on teenagers, groups likely to earn low wages. Conventional economic theory predicts that higher minimum wages lead to higher hourly earnings among people who are employed but lower employment rates. Data from the Current Population Survey during the period 1994-2007 indicate that there is a significant disemployment effect of higher minimum wages on Latino teenagers, although it is smaller for foreign- than native-born Latinos. Adult Latino immigrants’ earnings are less affected by minimum wage laws than other low-education natives, and their employment rates appear to increase when the minimum wage rises. We investigate whether skill levels and undocumented status help explain these findings.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5341.

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Length: 44 pages
Date of creation: Nov 2010
Date of revision:
Publication status: published in: David Leal and Stephen Trejo (eds)., Latinos and the Economy: Integration and Impact in Schools, Labor Markets, and Beyond, New York: Springer, 2011
Handle: RePEc:iza:izadps:dp5341

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Keywords: Latinos; Hispanics; minimum wage; low-skilled; immigrants;

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References

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  1. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers 678, Princeton University, Department of Economics, Industrial Relations Section..
  2. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," Working Papers 680, Princeton University, Department of Economics, Industrial Relations Section..
  3. Neeraj Kaushal, 2006. "Amnesty Programs and the Labor Market Outcomes of Undocumented Workers," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
  4. Pia M. Orrenius & Madeline Zavodny, 2008. "The Effect of Minimum Wages on Immigrants," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(4), pages 544-563, July.
  5. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," NBER Working Papers 12141, National Bureau of Economic Research, Inc.
  6. Mark Turner & Berna Demiralp, 2001. "Do higher minimum wages harm minority and inner-city teens?," The Review of Black Political Economy, Springer, vol. 28(4), pages 95-116, June.
  7. repec:fth:prinin:300 is not listed on IDEAS
  8. David Neumark & William Wascher, 1995. "The Effects of Minimum Wages on Teenage Employment and Enrollment: Evidence from Matched CPS Surveys," NBER Working Papers 5092, National Bureau of Economic Research, Inc.
  9. Madeline Zavodny, 1998. "Why minimum wage hikes may not reduce employment," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 18-28.
  10. Winegarden, C R & Khor, Lay Boon, 1991. "Undocumented Immigration and Unemployment of U.S. Youth and Minority Workers: Econometric Evidence," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 105-12, February.
  11. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
  12. Lang, Kevin & Kahn, Shulamit, 1998. "The effect of minimum-wage laws on the distribution of employment: theory and evidence," Journal of Public Economics, Elsevier, vol. 69(1), pages 67-82, July.
  13. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
  14. Jasso, Guillermina & Massey, Douglas S. & Rosenzweig, Mark R. & Smith, James P., 2008. "From Illegal to Legal: Estimating Previous Illegal Experience among New Legal Immigrants to the United States," IZA Discussion Papers 3441, Institute for the Study of Labor (IZA).
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Cited by:
  1. Pia Orrenius & Madeline Zavodny, 2011. "Trends in poverty and inequality among Hispanics," Working Papers 1109, Federal Reserve Bank of Dallas.

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