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Effects of state minimum wage increases on employment, hours, and earnings of low-wage workers in Illinois

Author

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  • Mastracci, Sharon H.
  • Persky, Joseph J.

Abstract

In a 2003 study, we simulated the effects of a minimum wage increase in Illinois using payroll and population data, and predicted that the increase would not trigger widespread job loss. Data are now available to examine these effects empirically. Controlling for the demographics and economic changes of bordering states, as well as using Illinois before the minimum wage change as a control, we arrive at unexpected results given our prior simulations. Taken at face value, our estimates imply that the price elasticity of demand for low-wage workers in Illinois is high; in fact, much larger than current evidence suggests.

Suggested Citation

  • Mastracci, Sharon H. & Persky, Joseph J., 2008. "Effects of state minimum wage increases on employment, hours, and earnings of low-wage workers in Illinois," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 38(3), pages 1-11.
  • Handle: RePEc:ags:jrapmc:133004
    DOI: 10.22004/ag.econ.133004
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    References listed on IDEAS

    as
    1. David Neumark & William Wascher, 2004. "Minimum Wages, Labor Market Institutions, and Youth Employment: A Cross-National Analysis," ILR Review, Cornell University, ILR School, vol. 57(2), pages 223-248, January.
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    4. David Card, 1992. "Do Minimum Wages Reduce Employment? A Case Study of California, 1987–89," ILR Review, Cornell University, ILR School, vol. 46(1), pages 38-54, October.
    5. Robert Pollin & Stephanie Luce & Mark Brenner, 1999. "Economic Analysis of the New Orleans Minimum Wage Proposal," Research Reports rr1, Political Economy Research Institute, University of Massachusetts at Amherst.
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    7. Kenneth A. Couch & David C. Wittenburg, 2001. "The Response of Hours of Work to Increases in the Minimum Wage," Southern Economic Journal, Southern Economic Association, vol. 68(1), pages 171-177, July.
    8. Thomas R. Michl, 2000. "Can Rescheduling Explain the New Jersey Minimum Wage Studies?," Eastern Economic Journal, Eastern Economic Association, vol. 26(3), pages 265-276, Summer.
    9. Deere, Donald & Murphy, Kevin M & Welch, Finis, 1995. "Employment and the 1990-1991 Minimum-Wage Hike," American Economic Review, American Economic Association, vol. 85(2), pages 232-237, May.
    10. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
    11. Richard V. Burkhauser & Kenneth A. Couch & David C. Wittenburg, 2000. "Who Minimum Wage Increases Bite: An Analysis Using Monthly Data from the SIPP and the CPS," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 16-40, July.
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