Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/58927
Authors: 
Hirsch, Barry T.
Kaufman, Bruce E.
Zelenska, Tetyana
Year of Publication: 
2011
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6132
Abstract: 
The economic impact of the 2007-2009 increases in the federal minimum wage (MW) is analyzed using a sample of quick-service restaurants in Georgia and Alabama. Store-level biweekly payroll records for individual employees are used, allowing us to precisely measure the MW compliance cost for each restaurant. We examine a broad range of adjustment channels in addition to employment, including hours, prices, turnover, training, performance standards, and non-labor costs. Exploiting variation in the cost impact of the MW across restaurants, we find no significant effect of the MW increases on employment or hours over the three years. Cost increases were instead absorbed through other channels of adjustment, including higher prices, lower profit margins, wage compression, reduced turnover, and higher performance standards. These findings are compared with MW predictions from competitive, monopsony, and institutional/behavioral models; the latter appears to fit best in the short run.
Subjects: 
minimum wages
employment
labor market adjustments
labor market theories
JEL: 
J20
J30
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
949.25 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.