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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 17 de 2014


On the Robustness of Minimum Wage Effects:

Geographically-Disparate Trends and Job Growth Equations

John T. Addison
University of South Carolina, Durham University, GEMF-University of Coimbra, and IZA Bonn

McKinley L. Blackburn
University of South Carolina

Chad D. Cotti
University of Wisconsin-Oshkosh and University of Connecticut

Recent attempts to incorporate spatial heterogeneity in minimum-wage employment models have been attacked for using overly simplistic trend controls, and for neglecting the potential impact on employment growth. We investigate whether such considerations call into question our earlier findings of statistically insignificant employment effects for the restaurant-and-bar sector. We find that a focus on employment levels is still appropriate, and nonlinear trend controls do not dislodge our limited support for the existence of minimum-wage effects.

JEL Classification: J23, J38.

Keywords: minimum wages, employment, employment change, spatial controls

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