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Can Rescheduling Explain the New Jersey Minimum Wage Studies?

  • Thomas R. Michl

    (The Jerome Levy Economics Institute)

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    This paper interprets the New Jersey minimum wage studies of Card and Krueger and their critics, Neumark and Wascher, through a scheduling model. The former found an increase in the number of workers in New Jersey fast-food restaurants after the state minimum wage was increased, while the latter found a decline in the total payroll hours of New Jersey restaurants. The scheduling model predicts that firms will substitute workers for hours per worker after a wage increase, which is consistent with both studies. Evidence from a subset of restaurants that reported both workers and hours data to Neumark and Wascher supports this interpretation. The New Jersey minimum wage appears to have redistributed income effectively to the targeted population by raising wages and reducing weekly hours per worker by just over one hour without causing any job loss.

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    Paper provided by EconWPA in its series Macroeconomics with number 9908001.

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    Length: 19 pages
    Date of creation: 12 Aug 1999
    Date of revision:
    Handle: RePEc:wpa:wuwpma:9908001
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 19; figures: included
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    1. David Neumark & William Wascher, 1995. "The Effect of New Jersey's Minimum Wage Increase on Fast-Food Employment: A Re-Evaluation Using Payroll Records," NBER Working Papers 5224, National Bureau of Economic Research, Inc.
    2. David Card & Alan Krueger, 1997. "A Reanalysis of the Effect of the New Jersey Minimum Wage Increase on the Fast-Food Industry with Representative Payroll Data," Working Papers 772, Princeton University, Department of Economics, Industrial Relations Section..
    3. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
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