EN       DE
 
  Home   Search  
IDSC
 
IZA Newsroom
  Site Map   Contact   Member Login
   

IZA

Logo
The Effect of Tip Credits on Earnings and Employment in the U.S. Restaurant Industry
by William E. Even, David A. Macpherson
(December 2012)
revised version forthcoming in: Southern Economic Journal

Abstract:
According to federal law in 2012, employers can take a credit of up to $5.13 for tips received by workers in satisfying the minimum wage requirement of $7.25. This study uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment and earnings in the U.S. restaurant industry. Using data from the Quarterly Census of Employment and Wages and the Current Population Survey, we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full services restaurant industry and for tipped workers. The results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests.
Text: See Discussion Paper No. 7092  




 

© IZA  Impressum  Last updated: 2014-02-18  webmaster@iza.org    |   Bookmark this page    |   Print View