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The Minimum Wage and Latino Workers

Author

Listed:
  • Orrenius, Pia M.

    () (Federal Reserve Bank of Dallas)

  • Zavodny, Madeline

    () (University of North Florida)

Abstract

Latinos comprise a large and growing share of the low-skilled labor force in the U.S. and may be disproportionately affected by minimum wage laws as a result. We compare the effects of minimum wage laws on employment and earnings among Hispanic immigrants and natives compared with non-Hispanic whites and blacks. We focus on adults who have not finished high school and on teenagers, groups likely to earn low wages. Conventional economic theory predicts that higher minimum wages lead to higher hourly earnings among people who are employed but lower employment rates. Data from the Current Population Survey during the period 1994-2007 indicate that there is a significant disemployment effect of higher minimum wages on Latino teenagers, although it is smaller for foreign- than native-born Latinos. Adult Latino immigrants’ earnings are less affected by minimum wage laws than other low-education natives, and their employment rates appear to increase when the minimum wage rises. We investigate whether skill levels and undocumented status help explain these findings.

Suggested Citation

  • Orrenius, Pia M. & Zavodny, Madeline, 2010. "The Minimum Wage and Latino Workers," IZA Discussion Papers 5341, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp5341
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    References listed on IDEAS

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    1. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers 678, Princeton University, Department of Economics, Industrial Relations Section..
    2. David Neumark & William Wascher, 1995. "The Effects of Minimum Wages on Teenage Employment and Enrollment: Evidence from Matched CPS Surveys," NBER Working Papers 5092, National Bureau of Economic Research, Inc.
    3. Neeraj Kaushal, 2006. "Amnesty Programs and the Labor Market Outcomes of Undocumented Workers," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
    4. Mark Turner & Berna Demiralp, 2001. "Do higher minimum wages harm minority and inner-city teens?," The Review of Black Political Economy, Springer;National Economic Association, vol. 28(4), pages 95-116, June.
    5. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    6. David Card, 1992. "Do Minimum Wages Reduce Employment? A Case Study of California, 1987–89," ILR Review, Cornell University, ILR School, vol. 46(1), pages 38-54, October.
    7. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast-Food Industry," ILR Review, Cornell University, ILR School, vol. 46(1), pages 6-21, October.
    8. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
    9. 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.
    10. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
    11. Pia M. Orrenius & Madeline Zavodny, 2008. "The Effect of Minimum Wages on Immigrants' Employment and Earnings," ILR Review, Cornell University, ILR School, vol. 61(4), pages 544-563, July.
    12. Lang, Kevin & Kahn, Shulamit, 1998. "The effect of minimum-wage laws on the distribution of employment: theory and evidence," Journal of Public Economics, Elsevier, vol. 69(1), pages 67-82, July.
    13. 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.
    14. Madeline Zavodny, 1998. "Why minimum wage hikes may not reduce employment," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 18-28.
    15. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
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    18. repec:fth:prinin:300 is not listed on IDEAS
    19. Jasso, Guillermina & Massey, Douglas S. & Rosenzweig, Mark R. & Smith, James P., 2008. "From Illegal to Legal: Estimating Previous Illegal Experience among New Legal Immigrants to the United States," IZA Discussion Papers 3441, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Orrenius, Pia M. & Zavodny, Madeline, 2011. "Trends in poverty and inequality among Hispanics," Working Papers 1109, Federal Reserve Bank of Dallas.

    More about this item

    Keywords

    low-skilled; minimum wage; Hispanics; Latinos; immigrants;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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