Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263498 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15282
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Dube, Lester, and Reich (2010) argue that state-level minimum wage variation can be correlated with economic shocks, generating spurious evidence that higher minimum wages reduce employment. Using minimum wage variation within contiguous county pairs that share a state border, they find no relationship between minimum wages and employment in the U.S. restaurant industry. We show that this finding hinges critically on using cross-border counties to define local economic areas with which to control for economic shocks that are potentially correlated with minimum wage changes. We use, instead, multi-state commuting zones, which provide superior definitions of local economic areas. Using the same within-local area research design—but within cross-border commuting zones—we find a robust negative relationship between minimum wages and employment.
Subjects: 
minimum wage
employment
commuting zones
JEL: 
J23
J38
Document Type: 
Working Paper

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