Effects of the Minimum Wage on Employment Dynamics

28 Pages Posted: 27 Jun 2012

See all articles by Jonathan Meer

Jonathan Meer

Texas A&M University - Department of Economics

Jeremy West

Texas A&M University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: June 26, 2012

Abstract

Despite the voluminous literature on minimum wages, there is little consensus on the mechanisms by which employment might be affected. Using administrative data in a state-year panel, we evaluate employment dynamics directly. We find that although the minimum wage does not appear to have strong short-run effects on the level of total employment, it significantly reduces rates of job growth. This occurs primarily through reductions in hiring and this effect is somewhat more pronounced for continuing establishments than newborn establishments. Moreover, we find that the reduction in job creation cannot be attributed to reductions in employee turnover and that there is no effect on entry or exit of establishments.

Keywords: minimum wage, employment, dynamics

JEL Classification: J21, J23, J38, J63

Suggested Citation

Meer, Jonathan and West, Jeremy, Effects of the Minimum Wage on Employment Dynamics (June 26, 2012). Available at SSRN: https://ssrn.com/abstract=2094726 or http://dx.doi.org/10.2139/ssrn.2094726

Jonathan Meer (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Jeremy West

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

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