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Tipped Wage Effects on Earnings and Employment in Full-Service Restaurants

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  • Sylvia Allegretto
  • Carl Nadler

Abstract

type="main" xml:id="irel12108-abs-0001"> We exploit more than 20 years of changes in state-level tipped wage policy and estimate earnings and employment effects of the tipped wage using county-level panel data on full-service restaurants (FSR). We extend earlier work by Dube, Lester, and Reich ( ) and compare outcomes between contiguous counties that straddle a state border. We find a 10-percent increase in the tipped wage increases earnings in FSRs about 0.4 percent. Employment elasticities are sensitive to the inclusion of controls for unobserved spatial heterogeneity. In our preferred models, we find small, insignificant effects of the tipped wage on FSR employment.

Suggested Citation

  • Sylvia Allegretto & Carl Nadler, 2015. "Tipped Wage Effects on Earnings and Employment in Full-Service Restaurants," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 622-647, October.
    • Handle: RePEc:bla:indres:v:54:y:2015:i:4:p:622-647
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    References listed on IDEAS

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    1. Sylvia Allegretto & Arindrajit Dube & Michael Reich & Ben Zipperer, 2017. "Credible Research Designs for Minimum Wage Studies," ILR Review, Cornell University, ILR School, vol. 70(3), pages 559-592, May.
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    5. David Neumark & J. M. Ian Salas & William Wascher, 2014. "Revisiting the Minimum Wage—Employment Debate: Throwing Out the Baby with the Bathwater?," ILR Review, Cornell University, ILR School, vol. 67(3_suppl), pages 608-648, May.
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    12. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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    1. Joseph J. Sabia & Richard V. Burkhauser & Taylor Mackay, 2018. "Minimum Cash Wages, Tipped Restaurant Workers, and Poverty," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(4), pages 637-670, October.

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