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Own-Wage Elasticity: Quantifying the Impact of Minimum Wages on Employment

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  • Arindrajit Dube
  • Ben Zipperer

Abstract

The own-wage elasticity (OWE) of employment estimated using minimum wage increases provides an economically meaningful measure of the policy on jobs. We discuss how to interpret the magnitude of the OWE, including in terms of welfare and under alternative models of the labor market. We present a comprehensive set of OWE estimates from 88 studies and introduce an regularly updated repository of the estimates---https://economic.github.io/owe---an up-to-date snapshot of the existing literature for scholars and policymakers. We find that most studies to date suggest a fairly modest impact of minimum wages on jobs: the median OWE estimate of 72 studies published in academic journals is -0.13, which suggests that only around 13 percent of the potential earnings gains from minimum wage increases are offset due to associated job losses. Estimates published since 2010 tend to be closer to zero.

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  • Arindrajit Dube & Ben Zipperer, 2024. "Own-Wage Elasticity: Quantifying the Impact of Minimum Wages on Employment," NBER Working Papers 32925, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32925
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    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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