How Do Alternative Minimum Wage Variables Compare?
AbstractSeveral minimum wage variables have been suggested in the literature. Such a variety of variables makes it difficult to compare the associated estimates across studies. One problem is that these estimates are not always calibrated to represent the effect of a 10% increase in the minimum wage. Another problem is that these estimates measure the effect of the minimum wage on the employment of different groups of workers. In this paper we critically compare employment effect estimates using five minimum wage variables common in the literature: real minimum wage, “Kaitz index”, “fraction affected”, “fraction at” and “ fraction below” the minimum wage. Our principal finding is that the sign of this effect is robust across minimum wage variables, but its magnitude and significance are sensitive to the minimum wage variable used.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 05/6.
Date of creation: Mar 2005
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Find related papers by JEL classification:
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-03 (All new papers)
- NEP-LAB-2005-04-03 (Labour Economics)
- NEP-LTV-2005-04-03 (Unemployment, Inequality & Poverty)
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