Minimum Wage Channels of Adjustment
Author(s)
Hirsch, BT
Kaufman, BE
Zelenska, T
Griffith University Author(s)
Year published
2015
Metadata
Show full item recordAbstract
We analyze the effects of minimum wage increases in 2007–2009 using a sample of restaurants from Georgia and Alabama. Store‐level payroll records provide precise measures of compliance costs. We examine multiple adjustment channels. Exploiting variation in compliance costs across restaurants, we find employment and hours responses to be variable and in most cases statistically insignificant. Channels of adjustment to wage increases and to changes in nonlabor costs include prices, profits, wage compression, turnover, and performance standards.We analyze the effects of minimum wage increases in 2007–2009 using a sample of restaurants from Georgia and Alabama. Store‐level payroll records provide precise measures of compliance costs. We examine multiple adjustment channels. Exploiting variation in compliance costs across restaurants, we find employment and hours responses to be variable and in most cases statistically insignificant. Channels of adjustment to wage increases and to changes in nonlabor costs include prices, profits, wage compression, turnover, and performance standards.
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Journal Title
Industrial Relations
Volume
54
Issue
2
Subject
Applied economics
Industrial and employee relations