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Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania

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Author Info

  • David Card
  • Alan Krueger

Abstract

On 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.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 694.

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Date of creation: Mar 1993
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Handle: RePEc:pri:indrel:dsp017d278t020

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Keywords: minimum wages; employment;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. La (ir)relevancia del salario mínimo en Chile
    by Dany Jaimovich - Bakary Baludin in Development Therapy on 2012-07-18 12:40:00
  2. Does the minimum wage raise employment?
    by Economic Logician in Economic Logic on 2010-05-21 14:28:00
  3. Along the Minimum-Wage Battle Front
    by Nancy Folbre in Economix on 2010-11-01 08:00:00
  4. 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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