The Employment and Redistributive Effects of Reducing or Eliminating Minimum Wage Tip Credits

David Neumark and Maysen Yen

No 29213, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: J23 J38 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-isf, nep-lma and nep-ltv
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Published as David Neumark & Maysen Yen, 2023. "The employment and redistributive effects of reducing or eliminating minimum wage tip credits," Journal of Policy Analysis and Management, vol 42(4), pages 1092-1116.

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Journal Article: The employment and redistributive effects of reducing or eliminating minimum wage tip credits (2023)
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