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City Limits: What Do Local-Area Minimum Wages Do?

Dube, A; Lindner, A; (2021) City Limits: What Do Local-Area Minimum Wages Do? Journal of Economic Perspectives , 35 (1) pp. 27-50. 10.1257/jep.35.1.27. Green open access

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Abstract

Cities are increasingly setting their own minimum wages, and this trend has accelerated sharply in recent years. While in 2010 there were only three cities with their own minimum wages exceeding the state or federal standard, by 2020 there were 42. This new phenomenon raises the question: is it desirable to have city-level variation in minimum wage polices? We discuss the main trade-offs emerging from local variation in minimum wage polices and evaluate their empirical relevance. First, we document what type of cities raise minimum wages, and we discuss how these characteristics can potentially impact the effectiveness of city-level minimum wage policies. Second, we summarize the evolving evidence on city-level minimum wage changes and provide some new evidence of our own. Early evidence suggests that the impact of the policy on wages and employment to date has been broadly similar to the evidence on state- and federal-level minimum wage changes. Overall, city-level minimum wages seem to be able to tailor the policy to the local economic environment without imposing substantial distortions in allocation of labor and businesses across locations.

Type: Article
Title: City Limits: What Do Local-Area Minimum Wages Do?
Open access status: An open access version is available from UCL Discovery
DOI: 10.1257/jep.35.1.27
Publisher version: https://doi.org/10.1257/jep.35.1.27
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher's terms and conditions.
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/10121096
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