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http://ssrn.com/abstract=941970
 
 

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


David Neumark


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

William Wascher


Board of Governors of the Federal Reserve System - Division of Research and Statistics

November 2006

NBER Working Paper No. w12663

Abstract:     
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.

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Date posted: November 20, 2006  

Suggested Citation

Neumark, David and Wascher, William, Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research (November 2006). NBER Working Paper No. w12663. Available at SSRN: http://ssrn.com/abstract=941970

Contact Information

David Neumark (Contact Author)
University of California, Irvine - Department of Economics ( email )
3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-824-8496 (Phone)
949-824-2182 (Fax)
HOME PAGE: http://www.socsci.uci.edu/~dneumark/
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
William Wascher
Board of Governors of the Federal Reserve System - Division of Research and Statistics ( email )
20th and C Streets, NW
Washington, DC 20551
United States
202-452-2812 (Phone)
202-452-3819 (Fax)
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