Abstract

http://ssrn.com/abstract=2083088
 
 

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Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State


Joseph Sabia


affiliation not provided to SSRN

Richard V. Burkhauser


Cornell University - Department of Policy Analysis & Management (PAM); University of Melbourne, Melbourne Institute

Benjamin Hansen


University of Oregon - Department of Economics

April 1, 2012

Industrial and Labor Relations Review, Vol. 65, No. 2, 2012

Abstract:     
The authors estimate the effect of the 2004–6 New York State (NYS) minimum wage increase from $5.15 to $6.75 per hour on the employment rates of 16- to 29-year-olds who do not have a high school diploma. Using data drawn from the 2004 and 2006 Current Population Survey, they employ difference-in-difference estimates to show that the NYS minimum wage increase is associated with a 20.2% to 21.8% reduction in the employment of less-skilled, less-educated workers, with the largest effects on those aged 16 to 24. Their estimates imply a median employment elasticity with respect to the minimum wage of around –0.7, large relative to previous researchers’ estimates. The authors’ findings are robust to their choice of geographically proximate comparison states, the use of a more highly skilled within-state comparison group, and a synthetic control design approach. Moreover, their results provide plausible evidence that state minimum wage increases can have substantial adverse labor demand effects for low-skilled individuals that are outside previous elasticity estimates, ranging from –0.1 to –0.3.

Keywords: minimum wage, employment, difference-in-difference

JEL Classification: J30, J31

Accepted Paper Series





Not Available For Download

Date posted: June 12, 2012  

Suggested Citation

Sabia, Joseph and Burkhauser, Richard V. and Hansen, Benjamin, Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State (April 1, 2012). Industrial and Labor Relations Review, Vol. 65, No. 2, 2012. Available at SSRN: http://ssrn.com/abstract=2083088

Contact Information

Joseph Sabia (Contact Author)
affiliation not provided to SSRN ( email )
Richard V. Burkhauser
Cornell University - Department of Policy Analysis & Management (PAM) ( email )
120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States
University of Melbourne, Melbourne Institute ( email )
Alan Gilbert Bldg, 7th Floor
161 Barry Street
Carlton, VIC 3053
Australia
Benjamin Hansen
University of Oregon - Department of Economics ( email )
Eugene, OR 97403
United States
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