On the Robustness of Minimum Wage Effects: Geographically-Disparate Trends and Job Growth Equations

23 Pages Posted: 6 Sep 2014

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 Cotti

University of Wisconsin - Oshkosh

Abstract

Just as the standard two-way fixed effects model for estimating the impact of minimum wages on employment has been sharply criticized for its neglect of spatial heterogeneity so, too, have the latest models been attacked for their uncritical use of state- or county-specific linear trends (and other spatial counterfactuals). Further attenuation of the effects of policy is also alleged to obtain in such circumstances where the true effect of minimum wages is upon employment growth rather than levels. This paper investigates whether such considerations call into question our earlier findings of statistically insignificant employment effects for an archetypal low-wage sector. We report that a continued focus on employment levels is indicated and that while experimentation with nonlinear trends may be productive their use is unlikely to dislodge the finding of considerably reduced negative employment effects.

Keywords: minimum wages, employment, employment change, spatial controls

JEL Classification: J23, J38

Suggested Citation

Addison, John T. and Blackburn, McKinley L. and Cotti, Chad, On the Robustness of Minimum Wage Effects: Geographically-Disparate Trends and Job Growth Equations. IZA Discussion Paper No. 8420. Available at SSRN: https://ssrn.com/abstract=2492447

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 Cotti

University of Wisconsin - Oshkosh ( email )

800 Algoma Blvd
Oshkosh, WI WI 54901
United States

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