What Does the Minimum Wage Do?
Publication Year: 2014
Published by: W.E. Upjohn Institute
Title Page, Copyright Page, Dedication
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We wish to express our sincere thanks to Tim Bartik and Kevin Hollenbeck of the Upjohn Institute for Employment Research for their guidance and patience with this long effort. We are particularly indebted to Tim Butcher, chief economist at the UK Low Pay Commission, and Felix Ritchie, professor...
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The birth of the new minimum wage research (NMWR) can be dated to a conference at Cornell University held in late 1991 and the subsequent symposium that appeared in Industrial and Labor Relations Review (see Ehrenberg  for a description of the conference and...
Part 1: Micro
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Employment—specifically, the number of jobs—is square one for disputes about the minimum wage and its effects. Support for the minimum wage is premised on its improving the lives of those most vulnerable in the labor market. If a minimum wage leads to job loss for many...
3. Hours of Employment
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Perhaps evidence for the employment response is weak because of the way that employment is being measured—as the number of jobs or percent of people with jobs.1 Employees in minimum wage jobs are paid by the hour. Unless the number of hours worked is the same in all...
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Meta-analysis is a body of techniques for combining many statistical studies to determine an overall result. T. D. Stanley has written extensively on a particularly useful and straightforward technique, metaregression (Stanley 2001, 2005, 2008; Stanley and Doucouliagos...
5. Wages and Earnings
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How do increases in the minimum wage affect wages, earnings, and income? On its face, the answer is obvious: Those who are earning less than the new minimum wage will see their hourly rates rise, and if the effect on hours is not too severe, their earnings will also rise, as will...
6. Human Capital
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While research on the minimum wage most often examines its consequences for employment and wages, the minimum wage also potentially affects decisions about schooling, training, and the provision of non-wage benefits. The largest body of research on these decisions considers...
7. Poverty and Inequality
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An intent of the Fair Labor Standards Act and preceding state minimum wage laws was to assure that those who worked were able to afford a modest lifestyle. In this chapter we review the literature on how the minimum wage affects both the absolute and relative standard of...
Part 2: Macro
8. Gross Flows in the Labor Market
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As both the survey and meta-analysis of employment studies indicate, the effect of the minimum wage on employment is at most small. One way to understand why this is so is to examine the effect of the minimum wage on gross flows—the flows into and out of employment...
9. Labor Force Participation Rate, Unemployment, and Vacancies
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We have so far considered the effect of the minimum wage on several labor market quantities: the number of jobs filled, the number of people employed, and the number of hours worked, all of which are measures of employment; and gross flows in and out of employment...
10. The Product Market
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How does the product market reflect increases in the minimum wage? In the short run, any adjustment must come through output and prices. If there are important differences in productivity across firms in markets that are affected by the minimum wage, then the degree of...
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What have we learned from this exhaustive (and to us, exhausting) review of the minimum wage literature? It is only fair to the possibly equally exhausted reader that we briefly summarize our findings and provide some, but not too many, comments about the implications for...
Appendix A: Data Sources and Variables
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Several data sets are used in many analyses of the minimum wage and its effects. The same variables appear in much of this work. For the reader’s convenience, we discuss these below rather than discuss them in detail either repeatedly or only the first time each is encountered...
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About the Institute
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The W.E. Upjohn Institute for Employment Research is a nonprofit research organization devoted to finding and promoting solutions to employment-related problems at the national, state, and local levels. It is an activity of the W.E. Upjohn Unemployment Trustee Corporation, which was established in...
Publication Year: 2014