UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Industry Dynamics and the Minimum Wage: A Putty-Clay Approach

Aaronson, D; French, E; Sorkin, I; To, T; (2018) Industry Dynamics and the Minimum Wage: A Putty-Clay Approach. International Economic Review , 59 (1) pp. 51-84. 10.1111/iere.12262. Green open access

[img]
Preview
Text
French_Aaronson_et_al-2018-International_Economic_Review.pdf - Published version

Download (429kB) | Preview

Abstract

We document two new findings about the industry‐level response to minimum wage hikes. First, restaurant exit and entry both rise following a hike. Second, there is no change in employment among continuing restaurants. We develop a model of industry dynamics based on putty‐clay technology that is consistent with these findings. In the model, continuing restaurants cannot change employment, and thus industry‐level adjustment occurs gradually through exit of labor‐intensive restaurants and entry of capital‐intensive restaurants. Interestingly, the putty‐clay model matches the small estimated short‐run disemployment effect of the minimum wage found in other studies, but produces a larger long‐run disemployment effect.

Type: Article
Title: Industry Dynamics and the Minimum Wage: A Putty-Clay Approach
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/iere.12262
Publisher version: https://doi.org/10.1111/iere.12262
Language: English
Additional information: Copyright © (2017) The Authors. International Economic Review published by Wiley Periodicals, Inc. on behalf of University of Pennsylvania and Osaka University. This is an open access article under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10041592
Downloads since deposit
59Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item