Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?
The disagreement among studies of the employment effects of minimum wages in the United States is well known. What is less well known, and more puzzling, is the absence of agreement on what the research literature says – that is, how economists even summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well-established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers.
Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided.
We are grateful to Shantanu Khanna for assistance with this research, and to the authors of most of the papers we survey for help in this project. We are grateful to Stephen Bazen, Michele Campolieti, Arindrajit Dube, Kirabo Jackson, Jonathan Meer, Michael Saltsman, Michael Strain, and William Wascher for helpful comments. The opinions expressed within this paper are those of the author and do not necessarily reflect the opinions of the Joint Committee on Government and Finance or the West Virginia Legislature, nor those of the National Bureau of Economic Research.