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The Minimum Wage: Consequences for Prices and Quantities in Low-wage Labor Markets

43 Pages Posted: 12 May 2003  

Paul J. Wolfson

Tuck School of Business at Dartmouth

Dale Belman

Michigan State University

Date Written: May 2003

Abstract

Do moderate increases in the minimum wage reduce employment? If not, do they nevertheless raise wages? To examine these questions, we apply techniques of time-series analysis and systems estimation that are commonly used in macroeconomics and finance to five panels of data that contain between 11 and 34 low-wage industries. Our answers are "No" and "Yes" respectively. We find that increases in the federal minimum wage between 1947 and 1997 have raised average wages in many of these industries, especially the lowest wage ones. The effect on employment, however, is mixed and typically non-significant, even when average wages have risen.

Keywords: Employment, Wages, Time Series Analysis, Systems Estimation

Suggested Citation

Wolfson, Paul J. and Belman, Dale, The Minimum Wage: Consequences for Prices and Quantities in Low-wage Labor Markets (May 2003). Tuck School of Business Working Paper No. 03-20. Available at SSRN: https://ssrn.com/abstract=406640 or http://dx.doi.org/10.2139/ssrn.406640

Paul J. Wolfson (Contact Author)

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755-9023
United States
603-646-0519 (Phone)

Dale Belman

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)

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