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The classic paper on minimum wage hikes and employment rates is Card and Krueger. On April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per

The classic paper on minimum wage hikes and employment rates is Card and Krueger. On April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment. http://www.nber.org/papers/w4509 http://www.nber.org/papers/w4509

Bartweiss 9y ago
There's a criticism of Card and Kreuger that seems devastating, though. They assessed Full Time Employment (FTE), a statistic which counts full time work as 1 'unit' and part time work as 0.5 'units'. That's really alarming, because we want to assess hours worked, and they used a metric that can't differentiate 30 hours / week from 10 hours / week. It's even worse because cutting hours while hiring more workers is a known way to reduce benefit costs and increase flexibility. Neumark and Wascher redo the analysis using hours worked, and find a nonsignificant downward trend instead. I don't think this settles the minimum wage question, but I've never heard a defense of Card and Krueger's result against this charge. http://www.nber.org/papers/w5224 http://www.nber.org/papers/w5224

Bartweiss 9y ago

There's a criticism of Card and Kreuger that seems devastating, though. They assessed Full Time Employment (FTE), a statistic which counts full time work as 1 'unit' and part time work as 0.5 'units'. That's really alarming, because we want to assess hours worked, and they used a metric that can't differentiate 30 hours / week from 10 hours / week. It's even worse because cutting hours while hiring more workers is a known way to reduce benefit costs and increase flexibility. Neumark and Wascher redo the analysis using hours worked, and find a nonsignificant downward trend instead. I don't think this settles the minimum wage question, but I've never heard a defense of Card and Krueger's result against this charge. http://www.nber.org/papers/w5224 http://www.nber.org/papers/w5224