Minimum Wage Channels of Adjustment

Barry Hirsch (), Bruce Kaufman and Tetyana Zelenska

Industrial Relations: A Journal of Economy and Society, 2015, vol. 54, issue 2, 199-239

Abstract: type="main" xml:id="irel12091-abs-0001">

We analyze the effects of minimum wage increases in 2007–2009 using a sample of restaurants from Georgia and Alabama. Store-level payroll records provide precise measures of compliance costs. We examine multiple adjustment channels. Exploiting variation in compliance costs across restaurants, we find employment and hours responses to be variable and in most cases statistically insignificant. Channels of adjustment to wage increases and to changes in nonlabor costs include prices, profits, wage compression, turnover, and performance standards.

Date: 2015
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Working Paper: Minimum Wage Channels of Adjustment (2011)
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