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Minimum wage and employment in the fast food industry

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  • William Gissy

Abstract

Recent empirical studies on the impact of minimum wage legislation generate results that are inconsistent with conventional economic theory. Employing a methodology that compares affected with unaffected areas, these investigations indicate that employment levels are not adversely affected by the imposition of a minimum wage. Two studies in particular focus on the fast food industry. Although one study has come under attack for improperly measuring employment, an interesting theoretical question remains. This paper derives the demand for labor function of a fast food outlet facing price and profit margin constraints dictated by the company. The results of a minimum wage constraint are consistent with current empirical literature. Copyright International Atlantic Economic Society 1998

Suggested Citation

  • William Gissy, 1998. "Minimum wage and employment in the fast food industry," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 26(3), pages 304-308, September.
    • Handle: RePEc:kap:atlecj:v:26:y:1998:i:3:p:304-308
    DOI: 10.1007/BF02299347
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    References listed on IDEAS

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    1. Lawrence Katz & Alan Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Working Papers 678, Princeton University, Department of Economics, Industrial Relations Section..
    2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    3. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast-Food Industry," ILR Review, Cornell University, ILR School, vol. 46(1), pages 6-21, October.
    4. Fraser, Robert W, 1985. "Uncertainty and the Theory of Mark-up Pricing," Bulletin of Economic Research, Wiley Blackwell, vol. 37(1), pages 55-64, January.
    5. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," ILR Review, Cornell University, ILR School, vol. 46(1), pages 22-37, October.
    6. repec:fth:prinin:298 is not listed on IDEAS
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    Cited by:

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    2. Gail Pacheco & Vic Naiker, 2006. "Impact of the Minimum Wage on Expected Profits," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(4), pages 469-490.

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