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The Economic Effects of a Citywide Minimum Wage

  • Arindrajit Dube
  • Suresh Naidu
  • Michael Reich

This paper presents the first study of the economic effects of a citywide minimum wage---San Francisco's adoption of a minimum wage of $8.50 in early 2004. Using data from a balanced panel of restaurants and a variety of control groups, the authors find that the policy increased pay, compressed wages among restaurant workers, and did not create any detectable employment loss among affected restaurants. The authors also find smaller amounts of measurement error in these data than characterized earlier benchmark studies by David Card and Alan Krueger and by David Neumark and William Wascher. As a result, they can reject statistically negative employment estimates in previous studies. Other findings of the study are that fast-food and table-service restaurants responded differently to the minimum wage, with a small price increase and substantial increases in job tenure and the proportion of full-time workers at fast-food restaurants, but not at table-service restaurants.

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 60 (2007)
Issue (Month): 4 (July)
Pages: 522-543

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Handle: RePEc:ilr:articl:v:60:y:2007:i:4:p:522-543
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