Working Paper: NBER ID: w26926
Authors: Martha J. Bailey; John DiNardo; Bryan A. Stuart
Abstract: This paper examines the short and longer-term economic effects of the 1966 Fair Labor Standards Act (FLSA) which increased the national minimum wage to its highest level of the 20th Century and extended coverage to an additional 9.1 million workers. Exploiting differences in the “bite” of the minimum wage due to regional variation in the standard of living and industry composition, this paper finds that the 1966 FLSA increased wages dramatically but reduced aggregate employment only modestly. However, the disemployment effects were significantly larger among African-American men, forty percent of whom earned below the new minimum wage in 1966.
Keywords: Minimum Wage; Employment; Labor Market; Fair Labor Standards Act
JEL Codes: J23; J38; J88
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in average wages (J31) | increase in wages for previously covered workers (J38) |
| increase in average wages (J31) | increase in wages for newly covered workers (J38) |
| decrease in aggregate employment (J63) | larger disemployment effects among African American men (J79) |
| decrease in annual hours worked (J22) | larger reduction in annual hours worked among African American men (J79) |
| increase in average wages (J31) | compositional effects on disadvantaged groups (J15) |
| 1966 FLSA (J89) | increase in average wages (J31) |
| 1966 FLSA (J89) | decrease in aggregate employment (J63) |
| 1966 FLSA (J89) | decrease in annual hours worked (J22) |