Abstract

http://ssrn.com/abstract=226778
 
 

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Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania


David Card


University of California, Berkeley - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

Alan B. Krueger


Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

October 1993

NBER Working Paper No. w4509

Abstract:     
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.

Number of Pages in PDF File: 57

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Date posted: July 24, 2000  

Suggested Citation

Card, David and Krueger, Alan B., Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania (October 1993). NBER Working Paper No. w4509. Available at SSRN: http://ssrn.com/abstract=226778

Contact Information

David E. Card (Contact Author)
University of California, Berkeley - Department of Economics ( email )
Room 3880
Berkeley, CA 94720-3880
United States
510-642-5222 (Phone)
510-643-7042 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Alan B. Krueger
Princeton University - Industrial Relations Section ( email )
Princeton, NJ 08544-2098
United States
609-258-4046 (Phone)
609-258-2907 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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