The Effects of Minimum Wages over the Business Cycle

Joseph Sabia ()

Journal of Labor Research, 2014, vol. 35, issue 3, 227-245

Abstract: This study examines whether the low-skilled employment effects of minimum wage increases differ over the state business cycle. Controlling for spatial heterogeneity via state-specific productivity shocks to the low-skilled sector and state-specific non-linear time trends, the results suggest that minimum wage increases between 1989 and 2012 reduce low-skilled employment more during recessions than expansions. Estimated employment elasticities with respect to the minimum wage range from 0 to −0.2 during state economic expansions, but reach as high as −0.3 during troughs in the business cycle. Copyright Springer Science+Business Media New York 2014

Keywords: Minimum wage; Low-skilled employment; State business cycle (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (20)

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DOI: 10.1007/s12122-014-9180-x

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