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Minimum wage and employment in the fast food industry

  • William Gissy

Recent empirical studies on the impact of minimum wage legislation generate results that are inconsistent with conventional economic theory. Employing a methodology that compares affected with unaffected areas, these investigations indicate that employment levels are not adversely affected by the imposition of a minimum wage. Two studies in particular focus on the fast food industry. Although one study has come under attack for improperly measuring employment, an interesting theoretical question remains. This paper derives the demand for labor function of a fast food outlet facing price and profit margin constraints dictated by the company. The results of a minimum wage constraint are consistent with current empirical literature. Copyright International Atlantic Economic Society 1998

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File URL: http://hdl.handle.net/10.1007/BF02299347
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Article provided by International Atlantic Economic Society in its journal Atlantic Economic Journal.

Volume (Year): 26 (1998)
Issue (Month): 3 (September)
Pages: 304-308

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Handle: RePEc:kap:atlecj:v:26:y:1998:i:3:p:304-308
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  1. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," NBER Working Papers 4058, National Bureau of Economic Research, Inc.
  2. R.W. Fraser, 1984. "Uncertainty and the Theory of Mark-Up Pricing," Economics Discussion / Working Papers 84-04, The University of Western Australia, Department of Economics.
  3. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers 678, Princeton University, Department of Economics, Industrial Relations Section..
  4. 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.
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