National Institute on Aging
Income Security Policy Series
Economic Policy | Economics | Public Affairs, Public Policy and Public Administration | Public Policy
In this paper we use an estimating equation from the research of leading proponents of the view that minimum wage increases do not cause employment losses. Rather than using annual data from the May Current Population Survey (CPS), we test this hypothesis using monthly data from both the Survey of Income and Program Participation (SIPP) and the CPS. We find the traditional result that neoclassical theory would predict: minimum wage increases create employment losses that are concentrated among less valued workers. Minimum wage increases have an insignificant effect on the employment of prime age workers (aged 25 to 61), but they have large and significant negative employment effects on teenagers, young high school dropouts, and young blacks. Hence, the very people minimum wage policies claim to help are most likely to be adversely affected.
Burkhauser, Richard V.; Couch, Kenneth A.; and Wittenburg, David C., "Who Minimum Wage Increases Bite: An Analysis Using Monthly Data from the SIPP and CPS" (1997). Center for Policy Research. 402.
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