Tipped Wage Effects on Earnings and Employment in Full‐Service Restaurants

26 Pages Posted: 15 Sep 2015

See all articles by Sylvia Allegretto

Sylvia Allegretto

University of California, Berkeley

Carl Nadler

University of California, Berkeley

Date Written: October 2015

Abstract

We exploit more than 20 years of changes in state‐level tipped wage policy and estimate earnings and employment effects of the tipped wage using county‐level panel data on full‐service restaurants (FSR). We extend earlier work by Dube, Lester, and Reich ([Dube, Arindrajit, 2010]) and compare outcomes between contiguous counties that straddle a state border. We find a 10‐percent increase in the tipped wage increases earnings in FSRs about 0.4 percent. Employment elasticities are sensitive to the inclusion of controls for unobserved spatial heterogeneity. In our preferred models, we find small, insignificant effects of the tipped wage on FSR employment.

Suggested Citation

Allegretto, Sylvia and Nadler, Carl, Tipped Wage Effects on Earnings and Employment in Full‐Service Restaurants (October 2015). Industrial Relations: A Journal of Economy and Society, Vol. 54, Issue 4, pp. 622-647, 2015. Available at SSRN: https://ssrn.com/abstract=2660534 or http://dx.doi.org/10.1111/irel.12108

Sylvia Allegretto (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Carl Nadler

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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