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On the substitution effect of the minimum wage increase: new evidence


  • Yu Hsing


The impact of the minimum wage increase on the part-time/full-time employment ratio (PTFT) is re-examined. Contrary to some previous findings, strong evidence is found of the substitution effect that if the relative wage (the ratio of the minimum wage to the average hourly earning in the private sector) rises, PTFT decreases. The linear and logarithmic forms can be rejected. The partial adjustment process describes the lag response better. Real GDP growth is found to be insignificant and may be proxied by the unemployment rate for experienced workers.

Suggested Citation

  • Yu Hsing, 2000. "On the substitution effect of the minimum wage increase: new evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 7(4), pages 225-228.
  • Handle: RePEc:taf:apeclt:v:7:y:2000:i:4:p:225-228
    DOI: 10.1080/135048500351555

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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Robert D. Atkinson, Ph.D.: Minimum Wage/Maximum Growth
      by Robert D. Atkinson, Ph.D. in Huffington Post Business on 2013-02-22 02:20:10


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    Cited by:

    1. Bodo Aretz & Melanie Arntz & Terry Gregory, 2013. "The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector," German Economic Review, Verein für Socialpolitik, vol. 14(3), pages 282-315, August.

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