Minimum Wage Increases in a Recessionary Environment
John T. Addison
Department of Economics, Moore School of Business, University of South Carolina, and GEMF/University of Coimbra
McKinley L. Blackburn
Department of Economics, Moore School of Business, University of South Carolina
Chad D. Cotti
Department of Economics, University of Wisconsin-Oshkosh
Do seemingly large minimum-wage increases in an environment of deep recession produce clearer evidence of disemployment than is often observed in the modern minimum wage literature? This paper uses three data sets to examine the employment effects of the most recent increases in the U.S. minimum wage. We focus on two high-risk groups – restaurant-and-bar employees and teenagers – for the years 2005-2010. Although the evidence for a general disemployment effect is not uniform, estimates do suggest the presence of a negative minimum wage effect in states hardest hit by the recession.
JEL Classification: J2; J3; J4; J8.
Keywords: Minimum Wages; Disemployment; Earnings; Low-Wage Sectors; Geographically-Disparate Employment Trends; Recession.