Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania

David Card and Alan Krueger

No 694, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: On April 1, 1992 New Jersey's minimum wage rose from $4.25 to $5.05 per hour. To evaluate the impact of the new law we surveyed over 400 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum remained constant at $4.25 per hour) provide simple robust estimates of the effect of the increased minimum wage. Our empirical findings challenge the conventional notion that a rise in the minimum causes employment to decline. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 2.5 employees per store. We also compare employment changes at stores in New Jersey that were initially paying $5.00 per hour or more (and were therefore largely unaffected by the new law) to the employment changes at lower-wage stores, where the new law raised wages by 10-15 percent. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment. Finally, we evaluate theoretical models that might explain these results.

Keywords: minimum wages; employment (search for similar items in EconPapers)
JEL-codes: C00 (search for similar items in EconPapers)
Date: 1993-03
References: Add references at CitEc
Citations: View citations in EconPapers (109)

Downloads: (external link)
https://dataspace.princeton.edu/bitstream/88435/dsp017d278t020/1/315.pdf
Our link check indicates that this URL is bad, the error code is: 500 Internal Server Error

Related works:
Journal Article: Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania (1994)
Working Paper: Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:315

Access Statistics for this paper

More papers in Working Papers from Princeton University, Department of Economics, Industrial Relations Section. Contact information at EDIRC.
Bibliographic data for series maintained by Bobray Bordelon ().