Revisiting the minimum wage-employment debate: Throwing out the baby with the bathwater?

Arbeitspapier

We revisit the minimum wage-employment debate, which is as old as the Department of Labor. In particular, we assess new studies claiming that the standard panel data approach used in much of the new minimum wage research is flawed because it fails to account for spatial heterogeneity. These new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the United States have not reduced employment. We explore the ability of these research designs to isolate reliable identifying information and test the untested assumptions in this new research about the construction of better control groups. Our evidence points to serious problems with these research designs. We conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7166

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Wages, Compensation, and Labor Costs: Public Policy
• Subject: minimum wage ; employment ; control groups

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Neumark, David ; Salas, J. M. Ian ; Wascher, William
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/69384
• Last update: 10.03.2025, 11:41 AM CET