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Welfare Reform on the Web (March 2007): Minimum wage - overseas

Employment effects of two North-West minimum wage initiatives

L.D. Singell and J.R. Terborg

Economic Inquiry, vol.47, 2007, p.40-55

This analysis exploits a natural experiment initiated by Oregon and Washington State voter initiatives that raised the minimum wage over three successive years (1997-1999 in Oregon and 1999-2001 in Washington) by approximately 37% in both states. Results show that minimum wage hikes affect low-wage workers differently within and across industries. Specifically, employment growth specifications indicate that minimum wage rises generate consistently negative employment effects for eating and drinking workers where the minimum is shown to be relatively binding, but not for hotel and lodging workers where the minimum is less binding.

The impact of the minimum wage on female employment in Japan

D. Kawaguchi and K. Yamada

Contemporary Economic Policy, vol. 25, 2007, p. 107-118

This article examines the effect of the minimum wage on the employment of middle aged women in Japan, using data collected between 1993 and 1999. To estimate the effect, the authors compared the transition rate from employment to unemployment in a one-year window between two groups of workers. The first group’s wage was above the revised minimum level. The second group consisted of workers with wages below the revised minimum. Results suggest that the latter group were 20-30% more likely to be unemployed than those in the former group in the year after the minimum wage rise.

A Reexamination of Card and Krueger’s state-level study of the minimum wage

W.J. Wessels

Journal of Labor Research, vol. 28, 2007, p. 135-146

Card and Krueger’s difference-in-difference study of the 1990-1991 federal minimum wage hikes compared states by the proportion of workers directly affected by the minimum wage and they found that employment losses were not higher in states with more affected workers. They interpreted these results as showing that the minimum wage did not decrease employment. However, when the author applied their model to the 1996-1997 federal minimum wage hike, he found that employment losses were higher in states with more affected workers. These results implied that minimum wage rate rises did in fact reduce employment. It is suggested that the labour market may have been tighter in 1996-97, so that the negative effects of the minimum wage hike were more discernible.

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