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Identifying Minimum Wage Effects: New Evidence from Monthly CPS Data

Authors

  • JOSEPH J. SABIA

    1. Department of Public Administration & Policy, School of Public Affairs, 4400 Massachusetts Ave, NW, 336 Ward Circle Building, Washington, DC 20016.
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      American University, Department of Public Administration & Policy, School of Public Affairs, 4400 Massachusetts Ave, NW, 336 Ward Circle Building, Washington, DC 20016. E-mail: sabia@american.edu. The author thanks Richard Burkhauser, David Macpherson, David Neumark, and two anonymous referees for their useful comments and suggestions. Thanks also to Jean Roth at the National Bureau of Economic Research for assistance with the Current Population Survey (CPS) Merged Outgoing Rotation Group (MORG) data, and to Nikki Williams for her editorial assistance. This study was funded, in part, by the Employment Policies Institute. However, the views expressed here do not necessarily reflect their views. All errors are solely the responsibility of the author.


Abstract

The appropriateness of including year effects in employment models has been a contentious issue in the minimum wage literature. Using monthly data from the 1979–2004 Current Population Surveys, I find consistent evidence of adverse labor demand effects for teenagers across specifications preferred by those on each side of this debate. Estimated employment elasticities range from –0.2 to –0.3 and unconditional hours elasticities from –0.4 to –0.5.

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