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Minimum Wage Increases in a Soft U.S. Economy

Author

Listed:
  • Addison, John T.

    (Department of Economics, Moore School of Business, University of South Carolina, Columbia, USA and Institute for Advances Studies, Vienna)

  • Blackburn, McKinley L.

    (Department of Economics, Moore School of Business, University of South Carolina, Columbia, USA)

  • Cotti, Chad D.

    (Department of Economics, University of Wisconsin-Oshkosh, USA)

Abstract

Do apparently large minimum wage increases in an environment of straightened economic circumstances produce clearer evidence of disemployment effects than is typically reported in the new economics of the minimum wage? The present paper augments the sparse literature covering the very latest increases in the U.S. minimum wage, using three different data sets and the principal estimation strategies for handling geographically-disparate trends. Despite the seemingly more favorable milieu for identifying displacement effects, and although our treatment calls into question one well-received estimation strategy, our preferred specification generally fails to support a finding of negative employment effects. That is to say, minimum-wage workers are apparently concentrated in sectors of the economy for which the labor demand response to statutory wage hikes is minimal. Popular concern with a “recessionary multiplier” thus seems overdone.

Suggested Citation

  • Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2011. "Minimum Wage Increases in a Soft U.S. Economy," Economics Series 273, Institute for Advanced Studies.
  • Handle: RePEc:ihs:ihsesp:273
    as

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    File URL: http://www.ihs.ac.at/publications/eco/es-273.pdf
    File Function: First version, 2011
    Download Restriction: no

    References listed on IDEAS

    as
    1. Allegretto, Sylvia & Dube, Arindrajit & Reich, Michael, 2010. "Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data," Institute for Research on Labor and Employment, Working Paper Series qt7jq2q3j8, Institute of Industrial Relations, UC Berkeley.
    2. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    3. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2009. "Do minimum wages raise employment? Evidence from the U.S. retail-trade sector," Labour Economics, Elsevier, vol. 16(4), pages 397-408, August.
    4. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," ILR Review, Cornell University, ILR School, vol. 46(1), pages 22-37, October.
    5. David Neumark & William Wascher, 2011. "Does a Higher Minimum Wage Enhance the Effectiveness of the Earned Income Tax Credit?," ILR Review, Cornell University, ILR School, vol. 64(4), pages 712-746, July.
    6. repec:rim:rimwps:02-08 is not listed on IDEAS
    7. Sylvia A. Allegretto & Arindrajit Dube & Michael Reich, 2011. "Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(2), pages 205-240, April.
    8. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. David Neumark & J.M. Ian Salas & William Wascher, 2013. "Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?," NBER Working Papers 18681, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Minimum wages; Disemployment; Earnings; Low-wage sectors; Geographically-disparate employment trends; Recession;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J8 - Labor and Demographic Economics - - Labor Standards

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