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NJ and PA Once Again: What Happened to Employment When the PA-NJ Minimum Wage Differential Disappeared?

  • Saul D. Hoffman


    (Department of Economics,University of Delaware)

  • Diane Trace


    (Department of Economics, University of Delaware)

Card and Krueger's analysis of the impact of the 1992 increase in the NJ state minimum wage is very well known and still controversial. Interestingly, the original NJ-PA natural experiment was followed by another one involving the same two states, an experiment that has not yet been noted or examined. In 1996 and 1997, the federal minimum wage was increased in two steps, from $4.25 to $5.15, thereby increasing the minimum wage by $0.90 in PA but by just $0.10 in NJ. We use CPS data from 1995 and 1998 to examine the impacts on employment, using difference-in-difference and difference-in-difference-in-difference estimators that exploit within- state and between-state comparisons. We find consistent evidence that employment of “at-risk” groups was negatively impacted in PA relative to other groups in PA and to comparable groups in NJ.

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Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 07-08.

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Length: 23 pages
Date of creation: Oct 2007
Date of revision:
Publication status: Forthcoming in Eastern Economic Journal, January, 2009.
Handle: RePEc:dlw:wpaper:07-08.
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  1. Deere, Donald & Murphy, Kevin M & Welch, Finis, 1995. "Employment and the 1990-1991 Minimum-Wage Hike," American Economic Review, American Economic Association, vol. 85(2), pages 232-37, May.
  2. 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.
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