Labor Economics

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Minimum wages and employment: A cases study of the fast-food industry in New Jersey and Pennsylvania

On April 1, 1992, New Jersey’s minimum wage rose from $4.25 to $5.05 per hour. To evaluate the impact of the law, the authors surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise. Comparisons of employment growth at stores in New Jersey and Pennsylvania (where the minimum wage was constant) provide simple estimates of the effect of the higher minimum wage. The authors also compare employment changes at stores in New Jersey that were initially paying high wages (above $5.00) to the changes at lower-wage stores. They find no indication that the rise in the minimum wage reduced employment.

Full reference: Card, D., & Krueger, A. (1994) “Minimum wages and employment: A cases study of the fast-food industry in New Jersey and Pennsylvania” American Economic Review

Chap12_Card_Krueger_1994

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