Minimum wage debate: still not over


The new round of NBER papers is, as ever, interesting. One of particular interest comes from Jeffrey Clemens at the University of California San Diego. He refreshes the minimum wage debate by dialling in on the effect of hikes (a) during the great recession and (b) on lower-skilled individual aged 16-30, finding a fairly substantial effect on that group.

I analyze recent federal minimum wage increases using the Current Population Survey. The relevant minimum wage increases were differentially binding across states, generating natural comparison groups.

My baseline estimate is that this period's full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points. This estimate accounts for 43 percent of the sustained, 13 percentage point decline in this skill group's employment rate and a 0.49 percentage point decline in employment across the full population ages 16 to 64.

The debate is not over, but this does look like a reminder that there's 'no such thing as a free minimum wage hike'.