Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

We review the burgeoning literature on the employment effects of minimum wages—in the United States and other countries—that was spurred by the “new minimum wage research†beginning in the early 1990's. The wide range of existing estimates makes it difficult for us to draw broad generalizations about the implications of the new minimum wage research. Clearly, no consensus now exists about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that this recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. The overwhelming majority of the studies surveyed in this paper give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects. Moreover, the evidence tends to point to disemployment effects of minimum wages in the United States as well as many other countries. Two potentially more important conclusions emerge from our review. First, we see very few—if any—cases where a study provides convincing evidence of positive employment effects of minimum wages, especially from studies that focus on broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, when researchers focus on the least-skilled groups most likely to be adversely affected by minimum wages, we regard the evidence as relatively overwhelming that there are stronger disemployment effects for these groups.Minimum wage; Employment

Minimum Wage Effects on Employment and School Enrollment

We argue in this paper that the focus on employment effects in recent studies of minimum wages ignores an important interaction between schooling, employment, and the minimum wage. To study these linkages, we estimate a conditional logit model of employment and enrollment outcomes for teenagers using state-year observations for the period 1977 to 1989. The results show a negative influence of minimum wages on school enrollment and a positive effect on the proportion of teens neither employed nor in school. We further suggest that our results are consistent with substitution by employers of higher- for lower-skilled teenagers, with the displaced teens ending up both out of work and out of school.

Using the EITC to Help Poor Families: New Evidence and a Comparision with the Minimum Wage

This paper evaluates the effects of the earned income tax credit (EITC) on poor families. Exploiting state-level variation in EITCs, we find that the EITC helps families rise above poverty-level earnings. This occurs by inducing labor market entry in families that initially do not have an adult in the workforce. Evidence based on the federal EITC is less supportive of a positive impact of the EITC on poor families. Finally, our results suggest that for the range of policy changes typical of recent history in the U.S., the EITC is more beneficial for poor families than is the minimum wage.

The Influence of Labour Market Institutions on the Disemployment Effects of the Minimum Wage

Mindestlohn, Beschäftigungseffekt, Arbeitsmarkt, OECD-Staaten, Minimum wage, Employment effect, Labour market, OECD countries

The effects of minimum wages throughout the wage distribution

Workers initially earning near the minimum wage are adversely affected by minimum wage increases, while, not surprisingly, higher-wage workers are little affected. Although the pay of low-wage workers increases, their hours and employment decline, and the combined effect of these changes is a decline in earned income.Minimum wage

Particle types and sources associated with LDEF

The particulate contamination history of the Long Duration Exposure Facility (LDEF) can be resolved by careful analysis of particle types, the LDEF time line, evidence of the relationship between particles and the surface of the LDEF, and a consideration of probable sources. This work is far from complete but was initiated as part of the characterization of the condition of experimental trays that were returned to principle investigators for their analysis. The work presented in this photo-essay is continuing and will be updated in subsequent reports to NASA and at future technical meetings

Employment Effects of Minimum and Subminimum Wages: Reply to Card, Katz and Krueger

In Neumark and Wascher (1992), we present findings supporting the earlier consensus that minimum wages reduce employment for teens and young adults, with elasticities in the range -0.1 to -0.2. In addition, we find that subminimum wages moderate these disemployment effects. Card, Katz and Krueger (1993) criticize numerous aspects of our analysis, and contest our conclusions. This reply presents an assessment of their arguments, as well as additional evidence related to some of the criticisms that they raise. We conclude that the issues raised by Card, et al., upon further examination, do not alter the conclusions from our original paper, and in some cases even reinforce those conclusions.

Does a Higher Minimum Wage Enhance the Effectiveness of The Earned Income Tax Credit?

We study the effects of minimum wages and the EITC in the post-welfare reform era. For the minimum wage, the evidence points to disemployment effects that are concentrated among young minority men. For young women, there is little evidence that minimum wages reduce employment, with the exception of high school dropouts. In contrast, evidence strongly suggests that the EITC boosts employment of young women (although not teenagers). We also explore how minimum wages and the EITC interact, and the evidence reveals policy effects that vary substantially across different groups. For example, higher minimum wages appear to reduce earnings of minority men, and more so when the EITC is high. In contrast, our results indicate that the EITC boosts employment and earnings for minority women, and coupling the EITC with a higher minimum wage appears to enhance this positive effect. Thus, whether or not the policy combination of a high EITC and a high minimum wage is viewed as favorable or unfavorable depends in part on whose incomes policymakers are trying to increase.