Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania
AbstractOn April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4509.
Date of creation: Oct 1993
Date of revision:
Publication status: published as American Economic Review, Vol. 84, No. 4, pp. 772-793, September 1994.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
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Other versions of this item:
- Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
- David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
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- Does the minimum wage raise employment?
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by Nancy Folbre in Economix on 2010-11-01 08:00:00
- Human Rights Maps (73): Minimum Wages in the U.S.
by Filip Spagnoli in P.A.P.-Blog on 2009-12-01 09:01:41
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