The Effect of Legislated Minimum Wage Increases on Employment and Hours: A Dynamic Analysis

25 Pages Posted: 15 Feb 2010

See all articles by Dale Belman

Dale Belman

Michigan State University

Paul J. Wolfson

Independent

Abstract

We present a dynamic policy simulation analysing what would have happened to wages, employment, and total hours had the federal minimum wage increased in September 1998, a year after the last actual increase in our data. Prior work suggests that employment responses take 6 years to play out. Using a time-series model for 23 low-wage industries, we find a positive response of average wages over 54 months following an increase in the minimum wage, but neither employment nor hours can be distinguished from random noise. Ignoring confidence intervals, the adjustment of hours is complete after 1 year, the adjustment of employment after no more than two and one half years.

Suggested Citation

Belman, Dale and Wolfson, Paul J., The Effect of Legislated Minimum Wage Increases on Employment and Hours: A Dynamic Analysis. LABOUR, Vol. 24, Issue 1, pp. 1-25, March 2010, Available at SSRN: https://ssrn.com/abstract=1551545 or http://dx.doi.org/10.1111/j.1467-9914.2010.00468.x

Dale Belman (Contact Author)

Michigan State University ( email )

School of Labor and Industrial Relations
4th Floor, South Kedzie Hall
East Lansing, MI 48824-1032
United States
517-353-3905 (Phone)

Paul J. Wolfson

Independent

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