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The Economic Effects of a Citywide Minimum Wage

Arindrajit Dube, Suresh Naidu and Michael Reich
ILR Review
Vol. 60, No. 4 (Jul., 2007), pp. 522-543
Published by: Sage Publications, Inc.
Stable URL: http://www.jstor.org/stable/25249108
Page Count: 22
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The Economic Effects of a Citywide Minimum Wage
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Abstract

This paper presents the first study of the economic effects of a citywide minimum wage-San Francisco's adoption of an indexed minimum wage, set at $8.50 in 2004 and $9.14 by 2007. Compared to earlier benchmark studies by Card and Krueger and by Neumark and Wascher, this study surveys table-service as well as fast-food restaurants, includes more control groups, and collects data for more outcomes. The authors find that the policy increased worker pay and compressed wage inequality, but did not create any detectable employment loss among affected restaurants. The authors also find smaller amounts of measurement error than characterized the earlier studies, and so they can reject previous negative employment estimates with greater confidence. Fast-food and table-service restaurants responded differently to the policy, with a small price increase and substantial increases in job tenure and in the proportion of full-time workers among fast-food restaurants, but not among table-service restaurants.

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