Revisiting the Minimum Wage—Employment Debate: Throwing Out the Baby with the Bathwater?

By David Neumark, J. I. Salas, William L. Wascher. Social Science Research Network, 2014

489 citations recorded by the source corpus.

The authors revisit the long-running minimum wage–employment debate to assess new studies claiming that estimates produced by the panel data approach commonly used in recent minimum wage research are flawed by that approach's failure to account for spatial heterogeneity. The new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the United States have not reduced employment. The authors explore the ability of the new research designs to isolate reliable identifying information, and they test the designs' untested assumptions about the construction of better control groups. Their analysis reveals problems with the new research designs. Moreover, using methods that let the data identify the appropriate control groups, their results reaffirm the evidence of disemployment effects, with teen employment elasticities near −0.15. This evidence, they conclude, still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others.

Subfields: Economics and Econometrics, General Health Professions, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/c31dcf2a94fca12799341dc94ed7cb89805b4f94

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Citations in the corpus

Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (2020, unknown): “There are two concerns with Passel et al. (2012) estimates that I address.”
Pooling Multiple Case Studies Using Synthetic Controls: An Application to Minimum Wage Policies (2015, methodology): “Perhaps as a result of these problems with their sample construction and research design, Allegretto et al. (2015) also note that there is no reduction in employment for the subset of the events used by Neumark et al. (2014) with the most sizable relative minimum wage increases.”
Do Minimum Wage Increases Influence Worker Health? (2017, unknown): “Neumark, Salas, and Wascher (2014) argue that the heavily saturated models estimated by Dube, Lester, and Reich (2010) control for the very disemployment effects that are being investigated.”
Minimum Wages and Racial Inequality* (2020, background): “11By contrast, the bulk of the literature has focused on teen employment or workers in specific industries, typically restaurants (Abowd et al., 2000; Allegretto et al., 2017; Neumark et al., 2014).”
Transparency, Reproducibility, and the Credibility of Economics Research (2018, unknown): “…Jersey comparison from these papers was extended to the set of all cross-state minimum wage differences in Dube, Lester, and Reich (2010), and Neumark, Salas, and Wascher (2014). coin-toss technique to elicit true responses to sensitive questions, as well as a more standard question design,…”
Improving or disappearing: Firm-level adjustments to minimum wages in China (2018, background): “under 5% (Neumark et al., 2004), and that the changes in the minimum wage have been only small (often lower than the inflation rate). The situation in China is radically different. Since the promulgation of the new minimum-wage regulations in 2004, local governments have been required to implement f”
Labor Market Regulations: What Do We Know About Their Impacts in Developing Countries? (2014, unknown): “Although this “new minimum wage research” research has been inﬂuential, it has also been criticized on methodological grounds, most notably by Neumark and Wascher (2007), with a critique of the more recent research in Neumark et al. (2013).”
The Effect of Minimum Wages on Low-Wage Jobs* (2019, unknown): “It is worth noting that the disagreement on the choice of specification for estimating the impact of minimum wages on teen employment is also driven by these early period confounding shocks (Allegretto et al., 2017; Neumark et al., 2014).”
Difference-in-Differences with multiple time periods (2018, unknown): “However, another strand of the literature argues that raising the minimum wage leads to lower employment – see e.g. Neumark and Wascher (1992, 2000, 2008), Neumark et al. (2014), and Jardim et al. (2017).”