This study examines the effect of state minimum wage changes on new and existing business establishments. It employs a refined border approach in conjunction with other differencing methods to control for unobserved heterogeneous area characteristics. The findings suggest that state minimum wage increases deter new establishments from locating in an area, particularly in industries that rely on low-education workforces, such as the retail and manufacturing industries. However, existing establishments, regardless of industry type, are not found to be adversely affected by minimum wage policy.
Tuesday, August 10, 2010
Labor Demand Slopes Down: #3,672
Forthcoming in the Journal of Urban Economics (ungated, but I haven't compared to see if they are the same). Abstract: