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The employment elasticity of the minimum wage. Is it just politics after all?

Jesse Wursten

No 591940, Working Papers of Department of Management, Strategy and Innovation, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven

Abstract: The effect of minimum wages on employment is highly disputed. The main questions in the literature are on how to deal with spatial heterogeneity and dynamics. We use statistical (multi-factor error models) and economic (political ideology as control variable) methods to address the first. Furthermore, we extend the models to a dynamic setting to estimate more long term effects. We find that these enriched models all suggest there are no economically significant negative employment effects attached to moderate increases in the minimum wage.

Keywords: economics; labour market; minimum wages; employment (search for similar items in EconPapers)
Date: 2017-08
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Published in FEB Research Report MSI_1709

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