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.
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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 UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10041592 |
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