Minimum Wages and Employment
This paper investigates the effect of minimum wages on employment using a panel of US state-based data. We estimate a minimalist dynamic version of the specification implied by neo-classical theory. We find statistically and economically significant effects of minimum wages on youth employment. Unlike many other studies we find also significant effects on aggregate state employment. These results re-establish the conventional wisdom as existing before the work of Card-Krueger-Katz. The paper meets the methodological criticisms of this sort of panel study made by CKK. An important econometric innovation in this paper is to produce estimates allowing for cross-sectional correlation, which offers unbiased inference and potential efficiency gains.
|Date of creation:||Jun 2001|
|Date of revision:|
|Contact details of provider:|| Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP|
References listed on IDEAS
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- Stephen Nickell & Glenda Quintini, 2001.
"Nominal wage rigidity and the rate of inflation,"
LSE Research Online Documents on Economics
20131, London School of Economics and Political Science, LSE Library.
- David Neumark & William Wascher, 1992. "Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws," ILR Review, Cornell University, ILR School, vol. 46(1), pages 55-81, October.
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- Neumark, David & Wascher, William, 1995.
"Minimum Wage Effects on Employment and School Enrollment,"
Journal of Business & Economic Statistics,
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- David Neumark & William Wascher, 1994. "Minimum Wage Effects on Employment and School Enrollment," NBER Working Papers 4679, National Bureau of Economic Research, Inc.
- Donald Robertson & James Symons, 2000.
"Factor residuals in SUR regressions: estimating panels allowing for cross sectional correlation,"
LSE Research Online Documents on Economics
20163, London School of Economics and Political Science, LSE Library.
- Donald Robertson & James Symons, 2000. "Factor Residuals in SUR Regressions: Estimating Panels Allowing for Cross Sectional Correlation," CEP Discussion Papers dp0473, Centre for Economic Performance, LSE.
- William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
- Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
- Stephen Nickell & John Van Reenen, 2001. "Technological Innovation and Performance in the United Kingdom," CEP Discussion Papers dp0488, Centre for Economic Performance, LSE.
- Burgess, Simon & Turon, Hélène, 2000.
"Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain,"
CEPR Discussion Papers
2490, C.E.P.R. Discussion Papers.
- Simon Burgess & Helene Turon, 2000. "Unemployment dynamics, duration and equilibrium: evidence from Britain," LSE Research Online Documents on Economics 20162, London School of Economics and Political Science, LSE Library.
- Simon Burgess & H Turon, 2000. "Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain," CEP Discussion Papers dp0474, Centre for Economic Performance, LSE.
- Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
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