Sunday, February 15, 2009

Empirical Evidence On Minimum Wages

A theme of this blog is that it is illogical to explain wages and employment by the interaction of well-behaved demand and supply curves in the labor market, even under assumptions of perfect competition, no information asymmetries, etc. Since orthodox teaching on the subject is simply incorrect, David Card's empirical results on minimum wages did not astonish me.

For those interested in these results, I notice that researchers at Berkeley have extended them. So this paper goes on my long list of ones to read some day:
"We use policy discontinuities at state borders to identify the effects of minimum wages on earnings and employment in restaurants and other low-wage sectors. Our approach generalizes the case study method by considering all local differences in minimum wage policies between 1990 and 2006. We compare all contiguous county pairs in the U.S. that straddle a state border and find no adverse employment effects. We show that traditional approaches that do not account for local economic conditions tend to produce spurious negative effects due to spatial heterogeneities in employment trends that are unrelated to minimum wage policies. Our findings are robust to allowing for long term effects of minimum wage changes." -- Amdrajit Dube, T. Wiliam Lester, and Michael Reich "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties", working paper (2008)

1 comment:

Anonymous said...


Thanks for your insights -- I will try to read all of the papers you highlight. You have a particular genius for identifying (hopefully) promising alternatives to the orthodox that may remain obscure otherwise!

Chris Pepin, Regina, SK