Working Paper: NBER ID: w25942
Authors: Charles C. Brown; Daniel S. Hamermesh
Abstract: We summarize recent research on the wage and employment effects of minimum wage laws in the U.S. and infer from non-U.S. studies of hours laws the likely effects of unchanging U.S. hours laws. Minimum wages in the U.S. have increasingly become a province of state governments, with the effective minimum wage now closely related to a state’s wage near the lower end of its wage distribution. Original estimates demonstrate how the 45-year failure to increase the exempt earnings level for salaried workers under U.S. hours laws has raised hours of lower-earning salaried workers and reduced their weekly earnings. The overall conclusion from the literature and the original work is that wages and hours laws in the U.S. have produced impacts in the directions predicted by economic theory, but that these effects have been quite small.
Keywords: minimum wage; overtime laws; employment effects; wage effects
JEL Codes: J23; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage laws (J38) | wages (J31) |
| minimum wage laws (J38) | employment (J68) |
| minimum wage laws (J38) | hours for lower-earning salaried workers (J38) |
| hours for lower-earning salaried workers (J38) | weekly earnings (J31) |