Working Paper: NBER ID: w25043
Authors: David Neumark
Abstract: I discuss the econometrics and the economics of past research on the effects of minimum wages on employment in the United States. My intent is to try to identify key questions raised in the recent literature, and some from the earlier literature, which I think hold the most promise for understanding the conflicting evidence and arriving at a more definitive answer about the employment effects of minimum wages. My secondary goal is to discuss how we can narrow the range of uncertainty about the likely effects of the large minimum wage increases becoming more prevalent in the United States. I discuss some insights from both theory and past evidence that may be informative about the effects of high minimum wages, and try to emphasize what research can be done now and in the near future to provide useful evidence to policymakers on the results of the coming high minimum wage experiment, whether in the United States or in other countries.
Keywords: minimum wage; employment effects; econometrics
JEL Codes: J23; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increases in minimum wages (J38) | Negative employment effects (F66) |
| Larger minimum wage increases (J38) | Greater employment losses (F66) |
| Geographically close controls (R12) | Estimates statistically indistinguishable from zero (C13) |
| Broader control groups (C92) | More substantial negative effects (D62) |