The Effect of Minimum Wages on Labour Market Outcomes: County‐Level Estimates from the Restaurant‐and‐Bar Sector

24 Pages Posted: 11 Aug 2012

See all articles by John T. Addison

John T. Addison

University of South Carolina - Moore School of Business - Department of Economics; IZA Institute of Labor Economics

McKinley L. Blackburn

University of South Carolina - Darla Moore School of Business

Chad D. Cotti

University of Wisconsin - Oshkosh; University of Connecticut - Department of Agricultural and Resource Economics

Date Written: September 2012

Abstract

We use US county‐level data on employment and earnings in the restaurant‐and‐bar sector to evaluate the impact of minimum‐wage changes in low‐wage labour markets. Our estimated models are consistent with a simple competitive model in which supply‐and‐demand factors affect both the equilibrium outcome and the probability of the minimum wage being binding. Our evidence does not suggest that minimum wages reduce employment once controls for trends in county‐level sectoral employment are incorporated. Rather, employment appears to exhibit an independent downward trend in states that have increased their minimum wages relative to states that have not, thereby predisposing estimates towards reporting negative outcomes.

Suggested Citation

Addison, John T. and Blackburn, McKinley L. and Cotti, Chad D., The Effect of Minimum Wages on Labour Market Outcomes: County‐Level Estimates from the Restaurant‐and‐Bar Sector (September 2012). British Journal of Industrial Relations, Vol. 50, Issue 3, pp. 412-435, 2012. Available at SSRN: https://ssrn.com/abstract=2127982 or http://dx.doi.org/10.1111/j.1467-8543.2010.00819.x

John T. Addison (Contact Author)

University of South Carolina - Moore School of Business - Department of Economics ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States
803-777-7400 (Phone)
803-777-6876 (Fax)

HOME PAGE: http://mooreschool.sc.edu/moore/economics/profiles/addison.htm

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

McKinley L. Blackburn

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-4931 (Phone)
803-777-6876 (Fax)

Chad D. Cotti

University of Wisconsin - Oshkosh ( email )

800 Algoma Blvd
Oshkosh, WI WI 54901
United States

University of Connecticut - Department of Agricultural and Resource Economics ( email )

1376 Storrs Road, Unit 4066
Storrs, CT 06269
United States
9202034660 (Phone)

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