Bridging the Gap in the New Minimum Wage Research

Bridging the Gap in the New Minimum Wage Research

Bibliographic Details
Main Author: Farren, Michael Diltz
Language:English
Published: The Ohio State University / OhioLINK 2017
Subjects:
Agricultural Economics
Economics
Regional Studies
Labor Economics
minimum wage
labor demand
regional economics
Online Access:http://rave.ohiolink.edu/etdc/view?acc_num=osu1500330440581116
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spelling ndltd-OhioLink-oai-etd.ohiolink.edu-osu15003304405811162021-08-03T07:03:22Z Bridging the Gap in the New Minimum Wage Research Farren, Michael Diltz Agricultural Economics Economics Regional Studies Labor Economics minimum wage labor demand regional economics The launch of the “New Minimum Wage Research” in the early 1990s by David Card, Alan Krueger, Lawrence Katz, David Neumark, and William Wascher—and the associated divergent empirical results—upended the standing consensus among economists that the minimum wage reduced employment of low-skill workers. I attempt to bridge the resulting gap in the empirical research. Rather than investigating what the effect is, I instead endeavor to understand why the various studies have found such differing results. I focus on clearly theorizing and articulating what the demand for low-skill labor should look like and from this develop a methodology to estimate it. By doing this, I address the core of the controversy, rather than offer yet another estimate of the employment effect of the minimum wage.My dissertation investigates three main theses that surprisingly, given the amount of previous minimum wage research, remain mostly unexplored. 1)First, I investigate whether the methodology used by previous research itself is responsible for the divergence in results. Nearly all minimum wage research uses a log-log econometric model. I provide theoretical arguments that the demand for low-skill labor should have the exact opposite curvature than that imposed on it by the log-log model. The log-log model also restricts the regression analysis to estimate a single effect of the minimum wage, regardless of the current level of the minimum wage or the size of the increase. My approach is more flexible and permits variation in the wage elasticity of demand for low-skill labor. 2)Most previous minimum wage research uses a single, nominally-valued, minimum wage variable. This approach also inherently assumes that there is a single effect of minimum wage increases, rather than allowing different sources of minimum wage variation to have different effects. In response, I estimate whether the effect of the minimum wage varies by type of minimum wage variation.3)Lastly, while multiple researchers—including those that originated the “New Minimum Wage Research”—have postulated that the effect of the minimum wage likely varies by region, labor market, or timing of the increase, nearly no research has actually systematically explored whether the effect of the minimum wage does vary across time and space. My results indicate that there is indeed substantial variation in how different labor markets and regions respond to minimum wage increases, and that the effect also varies over time. This supports Boudreaux’s contention that the effect of the minimum wage is unique to each region and time period (Boudreaux, 2016a). In short, the divergence in the results found by the New Minimum Wage Research may be at least partly attributable to the econometric model commonly used and variation in the effect of the minimum wage. 2017 English text The Ohio State University / OhioLINK http://rave.ohiolink.edu/etdc/view?acc_num=osu1500330440581116 http://rave.ohiolink.edu/etdc/view?acc_num=osu1500330440581116 unrestricted This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws.
collection NDLTD
language English
sources NDLTD
topic Agricultural Economics
Economics
Regional Studies
Labor Economics
minimum wage
labor demand
regional economics
spellingShingle Agricultural Economics
Economics
Regional Studies
Labor Economics
minimum wage
labor demand
regional economics
Farren, Michael Diltz
Bridging the Gap in the New Minimum Wage Research
author Farren, Michael Diltz
author_facet Farren, Michael Diltz
author_sort Farren, Michael Diltz
title Bridging the Gap in the New Minimum Wage Research
title_short Bridging the Gap in the New Minimum Wage Research
title_full Bridging the Gap in the New Minimum Wage Research
title_fullStr Bridging the Gap in the New Minimum Wage Research
title_full_unstemmed Bridging the Gap in the New Minimum Wage Research
title_sort bridging the gap in the new minimum wage research
publisher The Ohio State University / OhioLINK
publishDate 2017
url http://rave.ohiolink.edu/etdc/view?acc_num=osu1500330440581116
work_keys_str_mv AT farrenmichaeldiltz bridgingthegapinthenewminimumwageresearch
_version_ 1719452776312864768

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