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- Title
ARE THE EFFECTS OF MINIMUM WAGE INCREASES ALWAYS SMALL? NEW EVIDENCE FROM A CASE STUDY OF NEW YORK STATE.
- Authors
SABIA, JOSEPH J.; BURKHAUSER, RICHARD V.; HANSEN, BENJAMIN
- Abstract
The authors estimate the effect of the 2004-6 New York State (NYS) minimum wage increase from $5.15 to $6.75 per hour on the employment rates of 16- to 29-year-olds who do not have a high school diploma. Using data drawn from the 2004 and 2006 Current Population Survey, they employ difference-in-difference estimates to show that the NYS minimum wage increase is associated with a 20.2% to 21.8% reduction in the employment of less-skilled, less-educated workers, with the largest effects on those aged 16 to 24. Their estimates imply a median employment elasticity with respect to the minimum wage of around -0.7, large relative to previous researchers' estimates. The authors' findings are robust to their choice of geographically proximate comparison states, the use of a more highly skilled within-state comparison group, and a synthetic control design approach. Moreover, their results provide plausible evidence that state minimum wage increases can have substantial adverse labor demand effects for low-skilled individuals that are outside previous elasticity estimates, ranging from -0.1 to -0.3.
- Subjects
NEW York (State); REAL wages; WAGES; WAGE increases; LABOR incentives; MINIMUM wage
- Publication
ILR Review, 2012, Vol 65, Issue 2, p350
- ISSN
0019-7939
- Publication type
Article
- DOI
10.1177/001979391206500207