October 2011

IZA DP No. 6036: Minimum Wage Increases Under Straightened Circumstances

revised version published as 'Minimum wage increases in a recessionary environment' in: Labour Economics, 2013, 23, 30-39

Do apparently large minimum wage increases in an environment of recession produce clearer evidence of disemployment effects than is typically observed in the new minimum wage literature? This paper augments the sparse literature on the most recent increases in the U.S. minimum wage, using three different data sets and the two main estimation strategies for handling geographically-disparate trends. The evidence is generally unsupportive of negative employment effects, still less of a 'recessionary multiplier.' Minimum wage workers seem to be concentrated in sectors of the economy for which the labor demand response to wage mandates is minimal.