Effects of the Minimum Wage on Employment Dynamics

NBER Working Paper No. 19262

Issued in August 2013, Revised in January 2015

NBER Program(s):Labor Studies, Public Economics



The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. We argue that the minimum wage will impact employment over time, through changes in growth rather than an immediate drop in relative employment levels. We conduct simulations showing that commonly-used specifications in this literature, especially those that include state-specific time trends, will not accurately capture these effects. Using three separate state panels of administrative employment data, we find that the minimum wage reduces job growth over a period of several years. These effects are most pronounced for younger workers and in industries with a higher proportion of low-wage workers.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w19262

Published: Jonathan Meer & Jeremy West, 2016. "Effects of the Minimum Wage on Employment Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 500-522. citation courtesy of

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