The Corner

Economy & Business

The Evidence on Minimum Wages and Jobs

One of the most striking features of the academic debate on minimum wages is that the scope of disagreement extends to characterizations of the literature itself.

Normally, in an active literature, one economist would believe the right answer to a question is X, and another would believe it is Y, but the two would agree on what the body of evidence as a whole has to say on the subject.

Not so with the minimum wage. Some economists believe that the totality of the evidence suggests it reduces employment, while others believe the opposite.

To the rescue ride economists David Neumark and Peter Shirley. From the abstract of their new paper, released Monday:

Summaries [of the research literature on the minimum wage’s effect on employment] range from “it is now well-established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.” We explore the question of what conclusions can be drawn from the literature, focusing on the evidence using subnational minimum wage variation within the United States that has dominated the research landscape since the early 1990s. To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers.

Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided.

(Emphasis mine.)

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