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Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties

  • Dube, Andrajit
  • Lester, T. William
  • Reich, Michael

We use policy discontinuities at state borders to identify the effects of minimum wages on earnings and employment in restaurants and other low-wage sectors. Our approach generalizes the case study method by considering all local differences in minimum wage policies between 1990 and 2006. We compare all contiguous county pairs in the U.S. that straddle a state border and find no adverse employment effects. We show that traditional approaches that do not account for local economic conditions tend to produce spurious negative effects due to spatial heterogeneities in employment trends that are unrelated to minimum wage policies. Our findings are robust to allowing for long term effects of minimum wage changes.

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Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt86w5m90m.

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Date of creation: 30 Nov 2010
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Handle: RePEc:cdl:indrel:qt86w5m90m
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