Working Paper: NBER ID: w29213
Authors: David Neumark; Maysen Yen
Abstract: Recent policy debate on minimum wages has focused not only on raising the minimum wage, but on eliminating the tip credit for restaurant workers. We use data on past variation in tip credits—or minimum wages for restaurant workers—to provide evidence on the potential impacts of eliminating (or reducing) the tip credit. Our evidence points to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without earnings effects on those who remain employed sufficiently large to raise total earnings in this sector. And most of our evidence provides no indication that higher tipped minimum wages would be well targeted to poor or low-income families or reduce the likelihood of being poor or very low income.
Keywords: No keywords provided
JEL Codes: J23; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reducing tip credits (J33) | higher tipped minimum wages (J38) |
| higher tipped minimum wages (J38) | decrease in employment among tipped restaurant workers (J63) |
| reducing tip credits (J33) | decrease in employment among tipped restaurant workers (J63) |
| higher tipped minimum wages (J38) | modest causal relationship with total earnings in the sector (J31) |
| higher tipped minimum wages (J38) | not effectively target low-income families (I24) |