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Product Market Evidence on the Employment Effects of the Minimum Wage

Aaronson, D; French, E; (2007) Product Market Evidence on the Employment Effects of the Minimum Wage. Journal of Labor Economics , 25 (1) pp. 167-200. 10.1086/508734. Green open access

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Abstract

We infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry. Whereas perfect competition implies that employment falls and prices rise after a minimum wage increase, the monopsony model potentially implies the opposite. We show that estimated price responses are consistent with the competitive model. We place fairly tight bounds on the employment response, with the most plausible parameter values suggesting that a 10% increase in the minimum wage lowers low‐skill employment by 2%–4% and total restaurant employment by 1%–3%.

Type: Article
Title: Product Market Evidence on the Employment Effects of the Minimum Wage
Open access status: An open access version is available from UCL Discovery
DOI: 10.1086/508734
Publisher version: http://dx.doi.org/10.1086/508734
Language: English
Additional information: Copyright © 2007 by The University of Chicago. All rights reserved.
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/1493282
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