Wednesday, January 6, 2016

By How Much Did the Federal Minimum Wage Reduce Employment During the Great Recession?

From UCSD economist Jeffrey Clemens:
The Minimum Wage and the Great Recession: Evidence from the Current Population Survey
I analyze recent federal minimum wage increases using the Current Population Survey. The relevant minimum wage increases were differentially binding across states, generating natural comparison groups. I first estimate a standard difference-in-differences model on samples restricted to relatively low-skilled individuals, as described by their ages and education levels. I also employ a triple-difference framework that utilizes continuous variation in the minimum wage's bite across skill groups. In both frameworks, estimates are robust to adopting a range of alternative strategies, including matching on the size of states' housing declines, to account for variation in the Great Recession's severity across states. My baseline estimate is that this period's full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points. This estimate accounts for 43 percent of the sustained, 13 percentage point decline in this skill group's employment rate and a 0.49 percentage point decline in employment across the full population ages 16 to 64.

(ht Greg Mankiw)

1 comment:

  1. Shouldn't the "empirically" based "economists" who advocate violent intervention be required to produce for us, at the very least, detailed empirical financial records of EVERY small and medium size business that would be or was impacted to determine empirically whether it's reasonable to assume each such business could "absorb" a minimum wage increase type law?

    My impression is that the "empirically" based "economists" rely mostly upon the most superficial general statistics imaginable.