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Effects of the Minimum Wage on Employment Dynamics

Author

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  • Jonathan Meer
  • Jeremy West

Abstract

The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. We argue that the minimum wage will impact employment over time through changes in growth rather than an immediate drop in relative employment levels. We show that commonly used specifications in this literature, especially those that include state-specific time trends, will not accurately capture these effects. Using three separate state panels of administrative employment data, we find that the minimum wage reduces job growth over a period of several years. This finding is supported using several empirical specifications.

Suggested Citation

  • Jonathan Meer & Jeremy West, 2016. "Effects of the Minimum Wage on Employment Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 500-522.
    • Handle: RePEc:uwp:jhriss:v:51:y:2016:i:2:p:500-522
    Note: DOI: 10.3368/jhr.51.2.0414-6298R1
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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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