Do Minimum Wages Reduce Employment? A Case Study of California, 1987-89
In July 1988 California's minimum wage rose from $3.35 to $4.25. In the previous year, 11 percent of California workers and fully one-half of its teenage workers earned less than the new state minimum. The state-specific nature of the California increase provides a valuable opportunity to study the effects of minimum wage legislation. As in a conventional non-experimental program evaluation, labor market trends in other states can be used to infer what would have happened in California in the absence of the law. Drawing on published labor market statistics and microdata samples from the Current Population Survey, I apply this strategy to estimate the effects of the rise in the minimum wage on various groups and industries in the state. Special attention is paid to teenage workers and employees in retail trade. The results are striking. The increase in the minimum raised wages of teenagers and other low wage workers by 5-10 percent. Contrary to conventional predictions, however, the employment rate of teenage workers rose, while their school enrollment rate fell.
|Date of creation:||May 1991|
|Date of revision:|
|Publication status:||published as Industrial and Labor Relations Review Volume 4, No. 1, pp.38-54 October 1992|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- repec:fth:prinin:280 is not listed on IDEAS
- Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
- Lawrence Katz & Alan Krueger, 1991. "The Effect of the New Minimum Wage Law in a Low-Wage Labor Market," Working Papers 660, Princeton University, Department of Economics, Industrial Relations Section..
- Daniel Sullivan, 1989.
"Monopsony Power in the Market for Nurses,"
NBER Working Papers
3031, National Bureau of Economic Research, Inc.
- McKinley L. Blackburn & David E. Bloom & Richard B. Freeman, 1989. "The Declining Economic Position of Less-Skilled American Males," NBER Working Papers 3186, National Bureau of Economic Research, Inc.
- Jean Baldwin Grossman, 1983. "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 359-378.
- repec:pri:indrel:280 is not listed on IDEAS
- Lawrence F. Katz & Alan B. Krueger, 1991.
"The Effect of the New Minimum Wage Law in a Low-Wage Labor Market,"
NBER Working Papers
3655, National Bureau of Economic Research, Inc.
- Katz, L.F. & Krueger, A.B, 1991. "The Effect Of The New Minimum Wage Law In A Low-Wage Labor Market," Harvard Institute of Economic Research Working Papers 1544, Harvard - Institute of Economic Research.
- Orley C. Ashenfelter & Robert Smith, 1977.
"Compliance with the Minimum Wage Law,"
478, Princeton University, Department of Economics, Industrial Relations Section..
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3710. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.