minimum wage

Abstract

This paper presents a series of event studies that measure the stock market
reaction to news about the minimum wage. We use two samples of firms: a broad
sample of companies in low-wage industries; and a narrow sample of firms that
mentioned the cost effects of the federal minimum wage in their recent annual
reports. Our analysis of legislative events leading up to the 1989 amendments
to the Fair Labor Standards Act shows little systematic effect on the market
value of low-wage companies. We also analyze a series of events associated with
a confidential memo from the Secretary of Labor that was leaked in mid-1993.
Here, the stock market reactions suggest that news of a possible change in the
minimum wage may have a modest effect on value of low-wage companies.

Year of Publication
1994
Number
337
Date Published
11/1994
Publication Language
eng
Citation Key
7970
Krueger, A., & Card, D. (1994). The Effect of the Minimum Wage on Shareholder Wealth. Retrieved from http://arks.princeton.edu/ark:/88435/dsp019p290933r (Original work published 11/1994AD)
Working Papers
Abstract

This paper presents an analysis of the impact of a workplace education program that
was administered by a community college at two companies. One of the companies we study
is in the manufacturing sector and the other is in the service sector. The analysis relies on
longitudinal administrative data and cross-sectional survey data. We examine a broad range
of outcome variables, including workers’ earnings, performance awards, job attendance, and
subjective performance measures. Our main finding is that the program had a small, positive
impact on earnings at the manufacturing company, but an insignificant impact at the service
company. We also find that the training program had a positive association with the
incidence of job bids, upgrades, performance awards, and job attendance. At the
manufacturing company, occupational courses, such as blue print reading, had the largest
impact.

Year of Publication
1994
Number
329
Date Published
05/1994
Publication Language
eng
Citation Key
Journal of Labor Economics, Vol. 16, No. 1, 1998
Krueger, A., & Rouse, C. (1994). New Evidence on Workplace Education. Retrieved from http://arks.princeton.edu/ark:/88435/dsp0112579s25n (Original work published 05/1994AD)
Working Papers
Abstract

This paper provides a theoretical analysis of optimal minimum wage policy in a perfectly
competitive labor market. We show that a binding minimum wage – while leading to
unemployment – is nevertheless desirable if the government values redistribution toward
low wage workers and if unemployment induced by the minimum wage hits the lowest
surplus workers first. This result remains true in the presence of optimal nonlinear taxes
and transfers. In that context, a minimum wage effectively rations the low skilled labor
that is subsidized by the optimal tax/transfer system, and improves upon the second-best
tax/transfer optimum. When labor supply responses are along the extensive margin, a
minimum wage and low skill work subsidies are complementary policies; therefore, the
co-existence of a minimum wage with a positive tax rate for low skill work is always
(second-best) Pareto inefficient. We derive formulas for the optimal minimum wage (with
and without optimal taxes) as a function of labor supply and demand elasticities and
the redistributive tastes of the government. We also present some illustrative numerical
simulations.

Year of Publication
2008
Number
535
Date Published
10/2008
Publication Language
eng
Citation Key
8125
Lee, D., & Saez, E. (2008). Optimal Minimum Wage Policy in Competitive Labor Markets. Retrieved from http://arks.princeton.edu/ark:/88435/dsp019019s246g (Original work published 10/2008AD)
Working Papers
Abstract

Using data from a longitudinal survey of fast food restaurants in Texas, the authors examine
the impact of recent changes in the federal minimum wage on a low-wage labor market. The authors
draw three main conclusions. first. the survey results indicate that less than 5 percent of fast food
restaurants use the new youth subminimum wage even though the vast majority paid a starting wage
below the new hourly minimum wage immediately before it went into effect. Second, although some
restaurants increased wages by an amount exceeding that necessary to comply with higher minimum
wages in both 1990 and 1991, recent increases in the federal minimum wage have greatly compressed
the distribution of starting wages in the Texas fast food industry. Third, employment increased
relatively in those firms likely to have been most affected by the 1991 minimum wage increase, while
price changes appear to be unrelated to mandated wage changes. These employment and price
changes do not seem consistent with conventional views of the effects of increases in a binding
minimum wage.

Year of Publication
1992
Number
298
Date Published
02/1992
Publication Language
eng
Citation Key
Industrial and Labor Relations Review, Vol 46, No. 1, October, 1992
Krueger, A., & Katz, L. (1992). The Effect of the Minimum Wage on the Fast Food Industry. Retrieved from http://arks.princeton.edu/ark:/88435/dsp013x816m62z (Original work published 02/1992AD)
Working Papers
Abstract

This paper uses job applications data to test the existence of non-competitive, ex—ante rents in the labor market. We first examine whether
jobs that pay the legal minimum wage face an excessive supply of labor as
measured by the number of job applications received for the most recent
position filled by the firm. The results indicate that openings for jobs
that pay the minimum wage attract significantly more job applications than
jobs that pay either more or less than the minimnum wage. This spike in the
job application rate distribution indicates that ex-ante rents generated for
enp1oyees by an above market-level minimum wage do not appear to be
completely dissipated by employer actions.
The second part of the paper uses a similar approach to examine whether jobs in high-wage industries pay above market-clearing wage rates. We find a
weak, positive relationship between inter-industry application differentials
and inter-industry wage differentials. In addition, our results indicate
that employer size has a sizeable positive effect on the job application rate
even after controlling for the wage rate. The paper considers several
possible explanations for these findings.

Year of Publication
1988
Number
230
Date Published
04/1988
Publication Language
eng
Citation Key
Quarterly Journal of Economics, Vol 106, August 1991
Holzer, H., Krueger, A., & Katz, L. (1988). Job Queues and Wages: New Evidence on the Minimum Wage and Inter-Industry Wage Structure. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01vt150j262 (Original work published 04/1988AD)
Working Papers
Abstract

This paper re-examines the effect of the 1992 New Jersey minimum wage increase on
employment in the fast-food industry. We begin by analyzing employment trends using a
comprehensive new data set derived from the Bureau of Labor Statistics's (BLS's) ES-202 data
file. Both a longitudinal sample and a repeated-cross-section sample drawn from these data
indicate similar or slightly faster employment growth in New Jersey than in eastern Pennsylvania
after the rise in New Jersey's minimum wage, consistent with the main findings of our earlier
survey. We also use the ES-202 data to measure the effects of the 1996 increase in the federal
minimum wage, which raised the minimum wage in Pennsylvania but not in New Jersey. We
find no indication of relative employment losses in Pennsylvania. In light of these findings, we
re-examine employment trends in the sample of fast-food restaurants assembled by the
Employment Policies Institute (EPI) and David Neumark and William Wascher. The differences
between this sample and both the BLS data and our earlier sample are attributable to a small set
of restaurants owned by a single franchisee who provided the original Pennsylvania data for a
1995 EPI study. We also find that employment trends in the EPI/Neumark-Wascher sample are
strikingly different for firms that reported their data on a weekly, biweekly or monthly basis,
possibly because of seasonal factors. Controlling for the systematic effects of the varying
reporting intervals, the combined EPI/Neumark-Wascher sample shows no difference in hours
growth between New Jersey and Pennsylvania.

Year of Publication
1997
Number
393
Date Published
12/1997
Publication Language
eng
Citation Key
American Economic Review, 2000
Krueger, A., & Card, D. (1997). A Reanalysis of the Effect of the New Jersey Minimum Wage Increase on the Fast-Food Industry with Representative Payroll Data. Retrieved from http://arks.princeton.edu/ark:/88435/dsp016w924b826 (Original work published 12/1997AD)
Working Papers
Author
Abstract

Inequality in the unconditional distribution of observed wage rates in the U.S. rose substan-
tially during the 1980s, mostly in the lower tail of the distribution. The causes of this rising
wage inequality are obscured by the fact that concurrent decreases in the federal minimum wage
tend to increase observed wage inequality, regardless of its effect on employment. This study
uses regional variation in the relative level of the federal minimum wage to separately identify
the impact of the minimum wage from nation-wide growth in “latent” wage dispersion during
the 1980s. CPS wage data show a tight empirical relation between the relative level of the
federal minimum wage and dispersion in the lower tail of the wage distribution, across states
and over time. After accounting for the diminishing impact of the minimum wage during the
1980s, the evidence points to little or no increase in wage dispersion in the lower tail of the
wage distribution.

Year of Publication
1998
Number
399
Date Published
03/1998
Publication Language
eng
Citation Key
Quarterly Journal of Economics, Vol. 114, No3, August 1999
Lee, D. (1998). Wage Inequality in the U.S. during the 1980s: Rising Dispersion or Falling Minimum Wage?. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01765371335 (Original work published 03/1998AD)
Working Papers
Year of Publication
1991
Number
280
Date Published
01/1991
Publication Language
eng
Citation Key
IRRA 43rd. Annual Proceedings, Vol. 43, 1991
Krueger, A., & Katz, L. (1991). The Effect of the New Minimum Wage Law in a Low-Wage Labor Market. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01hh63sv89x (Original work published 01/1991AD)
Working Papers
Abstract

This paper analyses the distributional impact of the 1990 and 1991
increases in the federal minimum wage. The rise in the federal minimum wage
had very different impacts across states, depending on state-specific minimum
wage floors and the overall level of wages in each state. In states with a
higher fraction of workers affected by the minimum wage change, we find that
the minimum wage hike generated significant increases in the lower percentiles
of wages, and significant reductions in wage dispersion. The higher minimum
wage also led to increases in the lower percentiles of the family earnings
distribution, and a narrowing of the dispersion in family earnings. We find
some evidence that the increase in the minimum wage lowered poverty rates for
families with some attachment to the labor market.

Year of Publication
1994
Number
333
Date Published
10/1994
Publication Language
eng
Citation Key
7964
Krueger, A., & Card, D. (1994). A Living Wage? The Effects of the Minimum Wage on the Distribution of Wages, the Distribution of Family Earnings, and Poverty. Retrieved from http://arks.princeton.edu/ark:/88435/dsp013484zg89t (Original work published 10/1994AD)
Working Papers