NJ and PA Once Again: What Happened to Employment When the PA-NJ Minimum Wage Differential Disappeared?

Saul D. Hoffman and Diane Trace ()
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Diane Trace: Department of Economics, University of Delaware

No 07-08, Working Papers from University of Delaware, Department of Economics

Abstract: Card and Krueger's analysis of the impact of the 1992 increase in the NJ state minimum wage is very well known and still controversial. Interestingly, the original NJ-PA natural experiment was followed by another one involving the same two states, an experiment that has not yet been noted or examined. In 1996 and 1997, the federal minimum wage was increased in two steps, from $4.25 to $5.15, thereby increasing the minimum wage by $0.90 in PA but by just $0.10 in NJ. We use CPS data from 1995 and 1998 to examine the impacts on employment, using difference-in-difference and difference-in-difference-in-difference estimators that exploit within- state and between-state comparisons. We find consistent evidence that employment of “at-risk” groups was negatively impacted in PA relative to other groups in PA and to comparable groups in NJ.

Keywords: Minimum Wage; Card-Krueger (search for similar items in EconPapers)
JEL-codes: J01 J08 J78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
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Forthcoming in Eastern Economic Journal.

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