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The effects of a minimum wage on employment outcomes: an application of regression discontinuity design

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  • Kristine Laura S. Canales

    (Department of Economics, Texas A&M University)

Abstract

In this paper, I ask whether a minimum wage increase results in adverse employment outcomes in terms of work hours and the probability of gaining or retaining employment. Regression discontinuity design (rdd) is employed on a household-level panel survey dataset, using the minimum wage as the forcing variable that determines whether a sample is assigned to either the treatment group (minimum wage worker) or the control group (above minimum wage worker). The rdd graphs and the regressions seem to point to a negative effect of a higher minimum wage on work hours, not only for workers earning the minimum wage but also for workers earning 50 percent more than the minimum wage. The probability of gaining/retaining employment is lower for minimum wage workers and for workers earning 50 percent above the minimum wage.

Suggested Citation

  • Kristine Laura S. Canales, 2014. "The effects of a minimum wage on employment outcomes: an application of regression discontinuity design," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 51(2), pages 97-120, December.
    • Handle: RePEc:phs:prejrn:v:51:y:2014:i:2:p:97-120
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    File URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/912/812
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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