The Effects of Minimum Wage Legislation: A Case Study of California, 1987-89


In July 1988 California's minimum wage rose from $3.35 to
$4.25. During the previous year, ll percent of California workers
and fully one-half of its teenage workers earned less than the new
state minimum. The state-specific nature of the California
increase provides a valuable opportunity to study the effects of
minimum wage legislation. As in a conventional non-experimental
program evaluation, labor market trends in other states can be used
to infer what would have happened in California in the absence of
the law. Drawing on published labor market statistics and
microdata samples from the Current Population Survey, I apply this
strategy to estimate the effects of the rise in the minimum wage on
various groups and industries in the state. Special attention is
paid to teenage workers and employees in retail trade. The results
are striking. The increase in the minimum raised wages of teenagers
and other low wage workers by 5-10 percent. Contrary to
conventional predictions, however, the employment rate of teenage
workers rose, while their school enrollment rate fell. Overall
employment in retail trade was similarly unaffected.

Year of Publication
Date Published
Publication Language
Citation Key
Industrial and Labor Relations Review, 46, October, 1992
Working Papers