Academic journal article Monthly Labor Review

Determining the Employment Effect of Raising the Minimum Wage

Academic journal article Monthly Labor Review

Determining the Employment Effect of Raising the Minimum Wage

Article excerpt

One of the most controversial economic issues of the day is how the minimum wage affects employment. This issue has been at the forefront of labor economics because employment levels of younger and lower skilled workers fell disproportionately during the recent recession compared with that of older and more educated peers. In the postrecession era, unemployment rates continue to show persistent differences by educational attainment.

In a recent working paper entitled "Effects of the minimum wage on employment dynamics," (National Bureau of Economic Research working paper no. 19262, August 2013, revised December 2013) economists Jonathan Meer and Jeremy West assert that the current literature on the minimum wage lacks concrete findings on how a wage floor impacts employment dynamics. The existing studies they reviewed discuss how a legal wage floor affects the employment level for the entire workforce or for subgroups such as teenagers or food service workers rather than focusing more appropriately on how the minimum wage affects job creation among industries that are expanding and job losses among industries that are declining. This focus, say Meer and West, is crucial in understanding whether increasing the minimum wage can be a viable method of raising the standard of living of low-income households. …

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