Myth and Measurement: The New Economics of the Minimum Wage

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Princeton University Press, 1995 - Business & Economics - 422 pages
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David Card and Alan B. Krueger have already made national news with their pathbreaking research on the minimum wage. Here they present a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers. In a work that has important implications for public policy as well as for the direction of economic research, the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990-91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs.

A distinctive feature of Card and Krueger's research is the use of empirical methods borrowed from the natural sciences, including comparisons between the "treatment" and "control" groups formed when the minimum wage rises for some workers but not for others. In addition, the authors critically reexamine the previous literature on the minimum wage and find that it, too, lacks support for the claim that a higher minimum wage cuts jobs. Finally, the effects of the minimum wage on family earnings, poverty outcomes, and the stock market valuation of low-wage employers are documented. Overall, this book calls into question the standard model of the labor market that has dominated economists' thinking on the minimum wage. In addition, it will shift the terms of the debate on the minimum wage in Washington and in state legislatures throughout the country.

  

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Contents

Introduction and Overview
1
Employer Responses to the Minimum Wage Evidence from the FastFood Industry
20
Statewide Evidence on the Effect of the 1988 California Minimum Wage
78
The Effect of the Federal Minimum Wage on LowWage Workers Evidence from CrossState Comparisons
113
Additional Employment Outcomes
152
Evaluation of TimeSeries Evidence
178
Evaluation of CrossSection and PanelData Evidence
208
International Evidence
240
How the Minimum Wage Affects the Distribution of Wages the Distribution of Family Earnings and Poverty
276
How Much Do Employers and Shareholders Lose?
313
Is There an Explanation? Alternative Models of the Labor Market and the Minimum Wage
355
Conclusions and Implications
387
References
401
Index
415
Copyright

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Page 411 - Employment and Labour Supply Effects of the Minimum Wage: Some Pooled Time-Series Estimates from Canadian Provincial Data", Canadian Journal of Economics 16 (February 1983), p.

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About the author (1995)

David Card is the Class of 1950 Professor of Economics at the University of California, Berkeley, and a research associate of the NBER. Richard Blundell is the research director of the Institute for Fiscal Studies and the Leverhulme Research Professor at the University College, London. Richard B. Freeman is the Herbert Ascherman Professor of Economics at Harvard University, program director of labor studies at NBER, and senior research fellow at the Centre for Economic Performance of the London School of Economics.

Alan B. Krueger is Bendheim Professor of Economics and Public Affairs at Princeton University.

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