IDEAS home Printed from https://ideas.repec.org/a/oup/ecinqu/v35y1997i2p334-49.html
   My bibliography  Save this article

Minimum Wages and Tipped Servers

Author

Listed:
  • Wessels, Walter John

Abstract

Tips allow restaurants to pay servers lower wages. As more servers are hired, each serves fewer meals and earns less in tips. As a result, restaurants must pay a higher wage. This gives them monopsony power over wages. Over some range, a higher minimum wage should increase employment. Empirically, the author found the full 'reverse C' monopsony pattern of employment for restaurants, with employment first going up and then down as the minimum wage is increased. Copyright 1997 by Oxford University Press.

Suggested Citation

  • Wessels, Walter John, 1997. "Minimum Wages and Tipped Servers," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 334-349, April.
  • Handle: RePEc:oup:ecinqu:v:35:y:1997:i:2:p:334-49
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. Azar, Ofer H., 2011. "Business strategy and the social norm of tipping," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 515-525, June.
    3. Budd, John W. & McCall, Brian P., 1999. "Decomposing Changes In Retail Food Wage Distributions, 1983-1998: A Semi-Parametric Analysis," Working Papers 14327, University of Minnesota, The Food Industry Center.
    4. Ofer Azar, 2005. "Who do we tip and why? An empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 37(16), pages 1871-1879.
    5. repec:rss:jnljms:v6i10p3 is not listed on IDEAS
    6. Ofer H. Azar & Yossi Tobol, 2008. "Tipping as a Strategic Investment in Service Quality: An Optimal-Control Analysis of Repeated Interactions in the Service Industry," Southern Economic Journal, Southern Economic Association, vol. 75(1), pages 246-260, July.
    7. Allegretto, Sylvia A., 2013. "Waiting for Change: Is it Time to Increase the $2.13 Subminimum Wage?," Institute for Research on Labor and Employment, Working Paper Series qt3zx9v0zk, Institute of Industrial Relations, UC Berkeley.
    8. Ofer H. Azar, 2003. "The implications of tipping for economics and management," Others 0309002, EconWPA.
    9. Lee, Chinkook & O'Roark, Brian, 1999. "The Impact of Minimum Wage Increases on Food and Kindred Product Prices: An Analysis of Price Pass-Through," Technical Bulletins 184373, United States Department of Agriculture, Economic Research Service.
    10. Azar, Ofer H. & Yosef, Shira & Bar-Eli, Michael, 2015. "Restaurant tipping in a field experiment: How do customers tip when they receive too much change?," Journal of Economic Psychology, Elsevier, vol. 50(C), pages 13-21.
    11. Azar, Ofer H., 2009. "Tipping motivations and behavior in the US and Israel," MPRA Paper 20304, University Library of Munich, Germany.
    12. Larry D. Singell & James R. Terborg, 2007. "Employment Effects Of Two Northwest Minimum Wage Initiatives," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 40-55, January.
    13. Even, William E. & Macpherson, David A., 2012. "The Effect of Tip Credits on Earnings and Employment in the U.S. Restaurant Industry," IZA Discussion Papers 7092, Institute for the Study of Labor (IZA).
    14. Ofer Azar, 2005. "The Social Norm of Tipping: Does it Improve Social Welfare?," Journal of Economics, Springer, vol. 85(2), pages 141-173, August.
    15. Azar, Ofer H., 2004. "The history of tipping--from sixteenth-century England to United States in the 1910s," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(6), pages 745-764, December.
    16. Gregg Frasco & Chulho Jung, 2001. "When producer surplus underestimates rents," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 29(4), pages 393-405, December.
    17. Charlene Kalenkoski & Donald Lacombe, 2008. "Effects of Minimum Wages on Youth Employment: the Importance of Accounting for Spatial Correlation," Journal of Labor Research, Springer, vol. 29(4), pages 303-317, December.
    18. Ofer H. Azar, 2003. "Tipping: The Economics of a Social Norm," Labor and Demography 0309002, EconWPA.
    19. Azar, Ofer H., 2007. "Why pay extra? Tipping and the importance of social norms and feelings in economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 250-265, April.
    20. Ofer Azar, 2009. "Incentives and service quality in the restaurant industry: the tipping-service puzzle," Applied Economics, Taylor & Francis Journals, vol. 41(15), pages 1917-1927.
    21. Amir B. Ferreira Neto & Adam Nowak & Amanda Ross, 2017. "Do tourists tip more than local consumers? Evidence of taxi rides in New York City," Working Papers 17-14, Department of Economics, West Virginia University.
    22. Azar, Ofer H., 2006. "Tipping, firm strategy, and industrial organization," MPRA Paper 4485, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecinqu:v:35:y:1997:i:2:p:334-49. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/weaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.