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Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage

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  • David Card

Abstract

The imposition of a national wage standard sets up a useful natural experiment in which the "treatment effect" varies across states depending on the fraction of workers earning less than the new minimum. I use this idea to evaluate the effect of the April 1990 increase in the Federal minimum wage on teenage wages, employment, and school enrollment. Interstate variation in teenage wages was high at the end of the 1980s, in part because 16 states had enacted state-specific minimums above the prevailing Federal rate. Comparisons of grouped and individual state data confirm that the rise in the minimum wage significantly increased teenage wages. There is no evidence of corresponding losses in teenage employment, or changes in teenage school enrollment.

Suggested Citation

  • David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," NBER Working Papers 4058, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4058
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    1. Richard B. Freeman & Wayne B. Gray & Casey Ichniowski, 1981. "Low-Cost Student Labor: The Use and Effects of the Subminimum Wage Provisions for Full-time Students," NBER Working Papers 0765, National Bureau of Economic Research, Inc.
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    4. 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..
    5. Jean Baldwin Grossman, 1983. "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 359-378.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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