estimates of the value of patent rights in great britain and ireland 1852 1876 parameters of the distribution of the value of patent rights in britain and ireland for the 1852 76 period are estimated and compared with similar estimates by schankerman and pakes 1986 for the 1950 76 period market variables of the earlier period have a low ability but those of the later period a high ability to explain fluctuations in the value of patent rights aggregate patent rights have more lower valued patents in the earlier period in the earlier period there was no trade off between quantity and quality of patents but in the later period there was aggregate value of patent rights increased relative to gross fixed capital formation from 1870 to 1970 by approximately 100 percent a greater amount of r d effort helps to explain many of the differences found between the two periods copyright 1994 by the london school of economics and political science

balance of payment crises in emerging markets how early were the early warning signals although many papers have already proposed empirical models of currency crises the timing of such crises has received relatively little attention so far most papers use indeed a static specification and impose the same lag structure across all explanatory variables this by construction prevents from specifically timing the crisis signals sent by the leading indicators the objective here is to fill this gap by considering a set of dynamic discrete choice models the first contribution is to identify how early in advance each explanatory variable sends a warning signal some indicators are found to signal a crisis in the very short run while others signal a crisis at more distant horizons the second contribution is to show that state dependence matters albeit mostly in the short run the results have important implications for crisis prevention in terms of the timeliness and usefulness of the envisaged policy response

for better or for worse till the human development index do us part abstract this paper describes the results of research intended to explore the volatility inherent in the united nations development programme s undp human development index hdi the hdi is intended to be a simple and transparent device for comparing progress in human development and is an aggregate of life expectancy education and gdp per capita values of the hdi for each country are presented in the human development reports hdrs the first being published in 1990 however while the methodology is consistent for all countries in each year there are notable differences between years that make temporal comparisons of progress difficult the paper presents the results of recalculating the hdi for a simplified sample of 114 countries using various methodologies employed by the undp the results are a set of deviations of recalculated hdi ranks compared to the original ranks given in the hdrs the volatility that can result from such recalculation is shown to be substantial 10 15 ranks yet reports in the popular press are frequently sensitive to movements of only a few ranks such movement can easily be accounted for by changes in the hdi methodology rather than genuine progress in human development while the hdrs often carry warnings about the inadvisability of such year on year comparisons it is argued that the existence of such a high profile index and the overt presentation within league tables do encourage such comparison assuming that the hdi will be retained as a focal point within the hdrs then it is suggested that greater focus be upon more meaningful and robust categories of human development e g low medium and high rather than league tables where shifts of a few places perhaps as a result of nothing more than a methodological or data artefact may be highlighted in the press and by policy makers

the consequences of minimum wage laws some new theoretical ideas economists generally agree that the effect of a binding minimum wage law is to move firms backward along the demand curve for low skill workers however this prediction of worker displacement depends critically on the assumption that the productivity of firms labor is not dependent on the wage in this paper we show that in a conventional efficiency wage model a minimum wage may increase the level of employment in low wage jobs the formal logic of our model is similar to the case of labor demand under monopsony but arises in a model with a large number of employers

using local labor market data to re examine the employment effects of the minimum wage using quarterly census data for 1996 2000 the author evaluates how minimum wages affected teenage employment at the county level an analysis that includes all counties yields small and statistically insignificant effects consistent with previous research using state panels however in counties where the minimum wage was likely binding above the market clearing wage for teens the negative impact on employment was considerably larger the effect was strongest in small counties was restricted to transitory jobs and new hires and apparently was not experienced by young adults ages 19 22 the small employment effects found in much of the literature the author argues at least partly reflect the estimates inclusion of local labor markets where the minimum wage is not binding by averaging the effects across all areas with no disaggregation based on where the minimum wage is binding and where it is not these studies overlook important regional variation

globalization labor markets and policy backlash in the past the late nineteenth and twentieth centuries have many things in common both periods recorded fast growth convergence and labor market integration between oecd members both periods witnessed intense debate about who gained and who lost from globalization furthermore the earlier period saw a retreat from global liberalism long before the interwar deglobalization disaster did globalization of that time plant seeds of its own destruction are there lessons for the present

the impact of minimum wages on employment in a low income country a quasi natural experiment in indonesia the extensive literature on the employment impact of minimum wages has focused heavily on industrialized nations and very little on the developing world despite the importance of minimum wages in many low income countries one such country indo nesia was the setting for an unusual quasi natural experiment not only did minimum wages in indonesia increase sharply between 1990 and 1996 but the resultant increment in average wages varied markedly across different areas in greater jakarta the authors use household level labor market data to determine the extent of compliance with the legislation then estimate the employment impact in the clothing textiles footwear and leather industries based on a census of all large and medium sized establishments the evidence suggests that there was no negative employment impact for large establish ments either foreign or domestic but that workers in smaller domestic establishments may have suffered job losses as a result of minimum wage increases

is the minimum wage a pull factor for immigrants in this article the author studies the effects of the minimum wage on immigration he develops an analytical framework in which immigration is a function of the expected wage in the region of destination in the analysis the author exploits the state variation in expected wages stemming from the changes in the u s federal minimum wage during 1996 1997 and 2007 2009 the author addresses endogeneity between immigration and the expected wage using an instrumental variable approach his results provide consistent evidence that the policy induced a sizeable flow of low skilled immigrants to the united states in both periods this pull is attributable to the minimum wage increasing immigrants wages without harming their potential employment outcomes the author corroborates these findings by showing that the policy did not have any impact on the flow of high skilled immigrants the effect on low skilled immigration is also found when the interstate mobility of immigrants is considered finally changes in the minimum wage only attracted legal immigrants while undocumented immigrants were not affected

who minimum wage increases bite an analysis using monthly data from the sipp and the cps 1 introduction neoclassical competitive models of firm behavior predict that wage increases reduce the quantity of labor demanded by firms and holding the wage rate constant that the least valued workers are the first fired or the last hired minimum wage legislation exogenously increases the price of labor and data from periods when the minimum wage changes can be used to empirically test its effect on the employment of vulnerable workers however a new body of research using such data suggests that minimum wage increases do not reduce employment and may even increase it card 1992a b katz and krueger 1992 card katz and krueger 1994 card and krueger 1994 1995 from a theoretical perspective this new economics of the minimum wage has been characterized as an assault on the law of demand ehrenberg 1995 if modest increases in the minimum wage have no employment effects then the appropriateness of this method in helping the working poor is strictly a distributional issue 2 however if minimum wage increases reduce employment and if the jobs lost are concentrated among the vulnerable groups the policy claims to assist then policy makers must consider this unintended consequence hence estimating the elasticity of employment with respect to minimum wage increases is more than simply an empirical test of economic theory in this paper we use monthly data from the survey of income and program participation sipp and the current population survey cps to examine the effect of raising the minimum wage on employment in contrast to much of the new minimum wage literature we find that minimum wage increases significantly reduce employment moreover we find that the elasticity of demand for labor with respect to increases in the minimum wage is greatest for the most vulnerable groups in the working age population young adults who have low levels of education young black adults and teenagers and teenagers we also find that minimum wage increases reduce the overall employment of young adults and teenagers though the estimated elasticities are smaller 2 the new economics of the minimum wage the new minimum wage literature is dominated by studies that find that minimum wage increases have an insignificant or in some cases a positive and significant effect on the employment of young adults and teenagers aged 16 24 or on other subgroups within that population card 1992a b katz and krueger 1992 card katz and krueger 1994 card and krueger 1994 1995 most of these studies have now generated replies arguing that raising the minimum wage significantly decreases employment in these populations neumark and wascher 1992 1994 1996 in press deere murphy and welch 1995 taylor and kim 1995 burkhauser couch and wittenburg in press because these new studies of the minimum wage vary widely in their techniques we focus our discussion on those that use cps data and employ an estimation strategy related to the one we use in this paper neumark and wascher 1992 1994 1996 card katz and krueger 1994 card and krueger 1995 deere murphy and welch 1995 burkhauser couch and wittenburg in press 3 specifically we review studies that use a pooled time series cross sectional approach to estimate the employment effects of minimum wage increases on vulnerable groups such as teenagers with cps data deere murphy and welch 1995 also use pooled repeated cross sectional data from the cps to estimate the impact of minimum wage increases but their specification differs in some important ways from the studies discussed above deere murphy and welch 1995 estimate the effect of minimum wage increases over the period from 1985 through 1993 they construct intervals of monthly data from 1985 through 1993 that begin on the first day of april of each year and end on the last day of match during the following year for each interval they create annual averages of variables

technology adoption learning by doing and economic growth abstract we develop a model in which firms choose which technologies to adopt as well as the timing of such adoptions in between adoptions a firm accumulates expertise in its technology which allows it to operate the technology more efficiently thus there is firm specific learning by doing for certain parameterizations of the model and appropriate initial distributions of technologies and expertise equilibria are characterized by positive and constant growth of per capita output and positive but nonconstant growth of each firm s output we find firms adoption decisions and output growth depend upon the efficiency of capital markets journal of economic literature classification numbers o41 o33

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

path dependence endogenous innovation and growth the article presents a model of endogenous innovation and growth in which technological change is path dependent the historical pattern of technological development plays a central role in determining the pace of future technological change path dependence is explained using a distinction between fundamental and secondary knowledge the economy moves endogenously between periods of drastic and nondrastic innovation technological lock in is shown to be a special case of path dependence the model provides a rationale for cycles in technological leadership this rationale exists in equilibria with positive levels of fundamental research and in a world with no imitation

intersectoral innovation flows and national technological systems network analysis for comparing italy and germany abstract the paper compares the innovative structure and performance of italy and germany by using the concept of the technological system which is defined as the result of the interaction of four different components the industrial the innovative the commercial domestic and foreign markets and the institutional sub systems the analysis of the intersectoral innovation flows within the two national technological systems is based on an input output database rearranged in vertically integrated sectors specific hypotheses have been formulated and valid proxies for the variables studied have been used the final results have been obtained by using network analysis methodology and indicators this called for a dicotornisation of the original matrices these results take into account separately the existing differences between italy and germany in both absolute terms dimension effect and relative terms proportion effect the paper shows that germany is characterised by a higher level of systemic connection both in absolute and generally in relative terms the italian technological system seems to be segmented in a dualistic structure where few high tech sectors co exist along with a pool of traditional ones rather peripheral in the innovation flow network the german system on the contrary appears to be homogeneous with a more evenly distributed structure of intersectoral innovation flows the paper concludes by considering the effects of the introduction of other sub systems namely foreign market and public intervention while the former introduces further elements of differentiation between italy and germany the latter seems to perform a similar role in both systems

econometric issues in the analysis of contagion this paper presents a canonical econometric model of contagion and investigates the conditions under which contagion can be distinguished from inter dependence in a two country market set up it is shown that for a range of fundamentals the solution is not unique and for sufficiently large values of the contagion coefficients it has interesting bifurcation properties with bimodal density functions the extension of the model to herding behaviour is also briefly discussed to identify contagion effects in the presence of inter dependencies the equations for the individual markets or countries must contain country market specific forcing variables this sheds doubt on the general validity of the correlation based tests of contagions recently proposed in the literature which do not involve any country market specific fundamentals finally we show that ignoring inter dependence can introduce an upward bias in the estimate of the contagion coefficient and using monte carlo experiments we further show that this bias could be substantial

real exchange rate overvaluation and currency crises evidence from thailand this article examines real exchange rate rer misalignment in thailand in the lead up to the 1997 1998 currency crisis the methodology involves estimating the long run equilibrium rer based on the internal and external balance approach rer misalignment is measured by comparing the actual rer with the estimated long run equilibrium rer the results suggest that there was a persistent rer overvaluation from 1991 up to the onset of the crisis in 1997 too much net short term capital inflows and government expenditure expansion were the main contributory factors after the massive depreciation of nominal exchange rate during the crisis the rer seems to have gradually returned to its long run equilibrium level

leading indicators of crisis incidence evidence from developed countries abstract we examine which indicators are most useful in explaining the cost of economic crises in eu and oecd countries between 1970 and 2010 to define the dependent variable we combine a measure of costs to the economy which consists of the output and employment loss and the fiscal deficit with a database of crisis occurrence designed specifically for this task we take into account model uncertainty in two steps first for each potential leading indicator we select the relevant prediction horizon by using panel vector autoregression second we identify the most useful leading indicators with bayesian model averaging our results suggest that domestic housing prices share prices and credit growth and some global variables such as private credit constitute important sources of risk

employment effects of minimum and subminimum wages panel data on state minimum wage laws using panel data on state minimum wage laws and economic conditions for the years 1973 89 the authors reevaluate existing evidence on the effects of a minimum wage on employment their estimates indicate that a 10 increase in the minimum wage causes a decline of 1 2 in employment among teenagers and a decline of 1 5 2 in employment for young adults similar to the ranges suggested by earlier time series studies the authors also find evidence that youth subminimum wage provisions enacted by state legislatures moderate the disemployment effects of minimum wages on teenagers

sources of convergence in the late nineteenth century abstract this paper investigates convergence for a group of seven countries during the period 1870 1914 a standard empirical growth model which includes physical and human capital accumulation proves unsatisfactory in this setting an alternative neoclassical open economy factor accumulation model is proposed which admits capital and labor migration and may be extended to include a moving frontier the model explains the observed convergence pattern in the sample and suggests that factor accumulation patterns were the prime sources of labor productivity convergence from 1870 to 1914

the effect of taxes on labour in efficiency wage models abstract this paper analyses the effects of labour taxation on wage and employment in a moral hazard efficiency wage model where effort is a continuous variable and workers are risk averse in the model examined ad valorem and specific taxes on labour do not have the same consequences on the real wage both taxes have a negative effect on employment but the imposition of a specific tax causes an increase in the net real wage including firms to raise the quality of their workers these results are compared with those obtained in other versions of the shirking efficiency wage model

technological leadership and productivity leadership in manufacturing since the industrial revolution implications for the convergence debate the united states has been the labor productivity leader in manufacturing since the early nineteenth century despite changes in technological leadership from britain to the united states and then to germany and japan u s productivity leadership is based on the more widespread use of mass production rather than craft production methods determined by resource and factor endowments and demand patterns the two systems can coexist so long as the technologically lagging system imitates and adapts changes in the relative dynamism of the two systems explain changes in technological leadership but without necessarily leading to changes in productivity leadership copyright 1994 by royal economic society

unravelling financial market linkages during crises an empirical model of multiple asset classes across countries is formulated in a latent factor framework a special feature of the model is that financial market linkages during periods of financial crises including spillover and contagion effects are formally specified the model also captures a range of common factors including global shocks country and market shocks and idiosyncratic shocks the framework is applied to modelling linkages between currency and equity markets during the east asian financial crisis of 1997 98 the results provide strong evidence that cross market links are important spillovers have a relatively larger effect on volatility than contagion but both are statistically significant

the effect of the tipped minimum wage on employees in the u s restaurant industry according to federal law in 2013 employers can take a credit of up to 5 12 for tips received by workers in satisfying the minimum wage requirement of 7 25 this article uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment hours and earnings in the u s restaurant industry using data from the quarterly census of employment and wages and the current population survey we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full service restaurant industry and for tipped workers the results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

minimum wage policy and employment effects evidence from brazil the international literature on minimum wages greatly lacks empirical evidence for latin america in brazil not only are minimum wage increases large and frequent but they also have been used as both a social policy and an anti inflationary policy this paper estimates the effects of the minimum wage on wages and employment using panel data techniques and brazilian monthly household data from 1982 to 2000 a number of conceptual and identification questions are discussed for example the paper summarizes various strategies on how best to measure the effect of a constant national minimum wage presenting a menu of minimum wage variables that are then used to estimate wage and employment effects the paper also uses an employment decomposition that separately estimates the effect of the minimum wage on hours per worker and on the number of jobs robust results indicate that an increase in the minimum wage strongly compresses the wages distribution with small adverse effects on employment

vintage human capital growth and the diffusion of new technology we develop a model of vintage human capital in which each technology requires vintage specific skills we examine the properties of a stationary equilibrium for our economy the stationary equilibrium is characterized by an endogenous distribution of skilled workers across vintages the distribution is shown to be single peaked under general conditions there is a lag between the appearance of a technology and its peak usage a phenomenon known as diffusion an increase in the rate of exogenous technological change shifts the distribution of human capital to more recent vintages thereby increasing the diffusion rate

innovation networks and vertical integration abstract a central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and those of networks of small specialized producers on the other this paper argues that neither institutional structure is the panacea its supporters claim the menu of institutional alternatives is in fact quite large and both firms and networks of which there are several kinds can be successful growth promoting adaptations to the competitive environment industrial structures vary in their ability to coordinate information flows necessary for innovation and to overcome power relationships adverse to innovation the relative desirability of the various structures then depends on the nature and scope of technological change in the industry and on the effects of various product life cycle patterns the principal policy conclusion of this analysis is that the government s role ought to be facilitating rather than narrow and prescriptive allowing scope for firms to develop organizational forms that are best adapted to their particular environments

on crises contagion and confusion abstract since the tequila crisis of 1994 1995 the asian flu of 1997 and the russian virus of 1998 economists have been busy producing research on the subject of contagion yet few studies have examined empirically through which channels the disturbances are transmitted if there are indeed fundamental reasons for the spillovers we observe we attempt to fill this gap by analyzing how both trade links and the largely ignored financial sector links influence the pattern of fundamentals based contagion we examine the role of international bank lending the potential for cross market hedging and bilateral and third party trade in the propagation of crises

determinants of cross national knowledge transfer and its effect on firm innovation this study examines the determinants of international knowledge flow from a resource based perspective it evaluates the impact of cross national knowledge transfer on firm innovative performance based on 56 027 us patents owned by 53 selected firms in the us based pharmaceutical industry the results suggest that innovative performance is a curvilinear function of the international knowledge content used by a firm to innovate as hypothesized it was found that at 1 low and moderate levels of international knowledge content a firm s strategy to transfer international knowledge improves its innovative performance and at 2 higher levels of international knowledge content there are diminishing marginal returns to transferring knowledge from overseas

optimal minimum wage legislation a comment when firms in one sector do not know the ability of individual workers and there is a positive relation between ability and alternative earnings then firms will tend to pay the same wage to all workers and the average ability of those employed will be positively related to the wage in such an environment weiss i980 has demonstrated that the profit maximising wage may exceed the wage which clears the labour market causing equilibrium unemployment in a recent paper in this journal drazen i986 extends the weiss model by varying two assumptions first weiss assumes that a worker would attempt to maximise his wage drazen assumes that a worker is interested in his expected income the wage times the probability of being employed second drazen considers a world in which labour quality at each firm is not a function of the wage offered by that firm but instead depends on the average wage in the market drazen argues that with his assumptions the average market wage preferred by firms may exceed the wage which clears the labour market but that each firm has an incentive to lower the wage to the market clearing level in order to prevent free riding a minimum wage should be imposed the purpose of this note is to suggest that the first of the two assumptions mentioned above results in a market clearing wage in the weiss model thus free riding will not be a problem and there is no basis for imposing a minimum wage the difference between my results and those in drazen s paper can be easily explained consider the first of the two assumptions considered above workers are interested in their expected income and ignore the second assumption hence average labour quality at a firm is a function of the firm s wage there is no free rider problem in this case firms have two choice variables the wage w and fraction hired h of those who apply when workers are interested in their expected income wh it can be demonstrated see the next section that a firm will be at a corner solution for h h will be set as high as possible h i so all who apply are hired no firm wants to set the wage above the market clearing level thus the second assumption that the average market wage affects labour quality does not affect the equilibrium although each firm would like to free ride when firms try to lower the wage excess demand for labour results the desired wage will clear the labour market and there is no role for a

currency crashes in emerging markets an empirical treatment we use a panel of annual data for over 100 developing countries from 1971 through 1992 to characterize currency crashes we define a currency crash as a large change of the nominal exchange rate that is also a substantial increase in the rate of change of nominal depreciation we examine the composition of the debt as well as its level and a variety of other macroeconomic factors external and foreign crashes tend to occur when output growth is low the growth of domestic credit is high and the level of foreign interest rates are high a low ratio of fdi to debt is consistently associated with a high likelihood of a crash

are wages too low empirical implications of efficiency wage models firms may pay efficiency wages to enhance productivity the conventional presumption is that efficiency wages are inefficiently high because they lead to unemployment that is also inefficiently high government policies that lower wages raise output using a simple and general efficiency wage model this paper finds a necessary and sufficient condition for the opposite conclusion if the condition holds wages are inefficiently low leading to productivity that is also inefficiently low it is the high wage policies that raise output even if they also lower employment published empirical results support the condition no evidence is found for the conventional presumption

on the sources and significance of interindustry differences in technological opportunities abstract the set of technological opportunities in a given industry is one of the fundamental determinants of technical advance in that line of business we examine the concept of technological opportunity and discuss three categories of sources of those opportunities advances in scientific understanding and technique technological advances originating in other industries and in other private and governmental institutions and feedbacks from an industry s own technological advances data from the yale survey on industrial research and development are used to measure the strength of various sources of technological opportunity and to discern interindustry differences in the importance of these sources we find that interindustry differences in the strength and sources of technological opportunities contribute importantly to explanations of cross industry variation in r d intensity and technological advance

financial crises in asia and latin america then and now in this paper we analyze the extent to which past financial crises share common characteristics in latin america asia europe and the middle east we examine the recent crises in asia and in latin america in particular their severity to assess whether the considerable historical differences that we have documented for the earlier sample have eroded we conclude that in a deregulated world the well behaved asian financia1 crises are a relic of the past

the effect of minimum wages on youth employment in canada a panel study previous u s panel estimates of minimum wage effects have been criticized on the grounds that their identification rests on comparisons of low wage and high wage workers using canadian panel data for 1988 90 i compare estimates based on the traditional u s methodology with those based on samples of low wage workers exclusively the results would appear to vindicate the critics the minimum wage effect from the latter approach is virtually zero yet estimates from different subgroups of low wage workers indicate that there is a significant disemployment effect for those with longer low wage employment histories this highlights the heterogeneity within low wage workers and the importance of carefully defining the target group not solely based on workers wages

minimum wage laws are they overrated l minimum has been fixed in nominal terms at about 55 percent of the current average wage rising wages in the rest of the economy gradually erode the real minimum wage and eventually the process is repeated sometimes the increase in the nominal minimum is accompanied by a permanent reduction in those businesses exempted from the law proposals for a lower minimum wage for young workers or to index the minimum wage to the average wage have been debated but not adopted the minimum wage was last increased to 3 35 in 1981 since then average hourly wages have risen by 25 percent eliminating any momentum for a lower minimum wage for youth but reviving proposals for another increase in the nominal minimum economists are fascinated by the minimum wage because we have strong theoretical predictions about the direction of the effect of the minimum wage on employment and fairly widely accepted methods to estimate the size of that impact it probably didn t hurt that the earliest and later estimates lined up well with the predictions but that is not the only reason for our fascination with the topic depending on whether we include those who say they earn less than the minimum wage minimum wage workers account for 6 to 12 percent of those employed gilroy 1981 p 157 and less than 5 percent of wage and salary income the minimum wage gives economists a relatively rare opportunity to study the impact of an exogenous increase in the price of labor and thus a chance to refine our thinking

product market evidence on the employment effects of the minimum wage we infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry whereas perfect competition implies that employment falls and prices rise after a minimum wage increase the monopsony model potentially implies the opposite we show that estimated price responses are consistent with the competitive model we place fairly tight bounds on the employment response with the most plausible parameter values suggesting that a 10 increase in the minimum wage lowers low skill employment by 2 4 and total restaurant employment by 1 3

the effect of minimum wages on immigrants this study examines how minimum wage laws affect the employment and earnings of low skilled immigrants and natives in the united states minimum wage increases might have larger effects among low skilled immigrants than among natives because on average immigrants earn less than natives due to lower levels of education limited english skills and less social capital results based on data from the current population survey for the years 1994 2005 do not indicate that minimum wages had adverse employment effects among adult immigrants or natives who did not complete high school however low skilled immigrants may have been discouraged from settling in states that set wage floors substantially above the federal minimum

rational contagion and the globalization of securities markets this paper argues that globalization may promote contagion by weakening incentives for gathering costly information and by strengthening incentives for imitating arbitrary market portfolios in the presence of short selling constraints the gain of gathering information at a fixed cost may diminish as markets grow moreover if a portfolio manager s marginal cost for yielding below market returns exceeds the marginal gain for above market returns there is a range of optimal portfolios in which all investors imitate arbitrary market portfolios and this range widens as the market grows numerical simulations suggest that these frictions can have significant implications for capital flows in emerging markets

a reassessment of the new economics of the minimum wage literature with monthly data from the current population survey we estimate the employment effects of federal minimum wage increases using monthly current population survey cps data from 1979 through 1997 we find that the empirical differences in the new minimum wage literature based on cps data primarily can be traced to alternative methods of controlling for macroeconomic conditions we argue that the macroeconomic controls commonly included in models where no employment impact is found are inappropriate we consistently find a significant but modest negative relationship between minimum wage increases and teenage employment using alternative controls or allowing employer responses to the policy to occur with some delay

optimal minimum wage legislation in this paper we present a model in which minimum wage legislation may be pareto optimal this arises because a higher wage would be preferred to the market clearing wage by demanders for and suppliers of labour even though unemployment is induced and minimum wage legislation is needed to support the preferred equilibrium consider a labour market where the quality of labour depends positively on the wage offered if labour quality is highly sensitive to wage increases effective unit labour cost will fall as the wage rises this would lead the representative firm to prefer paying an above market clearing wage and to ration job slots such an effect has been studied when quality depends on an individual firm s wage offer see for example weiss i980 or stiglitz i974 suppose however that labour quality depended not on any individual firm s wage offer but on the average market wage if firms were atomistic each invidual firm would have an incentive to undercut the optimal above marketclearing wage trying to get the quality benefits of high average wages while paying lower wages itself the high wage solution would not be viable legislation fixing minimum wages might be required to support the preferred equilibrium quality might depend on average market wages when workers must decide whether or not to enter a labour market before they can sample and obtain specific job offers migration into labour markets for example rural to urban migration in less developed countries provides one example as the decision to migrate and therefore the quality of the labour pool will depend on some average of expected wage offers the decision over which profession to enter at the beginning of the educational process provides another example of course imperfect information plays a key role here it is assumed that both firms and workers have imperfect information about the suitability of individual workers for jobs both before and to a lesser extent after employment has begun this lack of information will rule out both profitable selfselection mechanisms and wages strictly proportional to output so that firms will care about the quality of the labour pool the non optimality of market clearing prices which will be demonstrated makes this paper similar to a number of papers on the implications of adverse selection in labour and product markets one may mention two excellent papers on screening in labour markets by guasch and weiss i980 i98i this paper builds on some of the results in those papers stiglitz and weiss i98i show how credit rationing may arise from a similar type of argument wilson

the mexican peso crisis sudden death or death foretold abstract we argue that allowing for the possibility of a self fulfilling panic helps to understand several features of the recent mexican crisis self fulfilling expectations became decisive in generating a panic only after the government ran down gross reserves and ran up short term dollar debt we present a simple model to explain how and why multiple equilibria can occur for some levels of reserves or debt but not for others lastly we argue that the imperfect credibility of mexican exchange rate policy made it advisable to follow more contractionary fiscal and monetary policies in 1994 our model formalizes the reasons why this is so

long waves and economic growth a critical appraisal no one who has examined the dynamics of capitalist economies over long historical periods can doubt that they experience significant long term variations in their aggregate performance the question is whether these long term variations are more than the outcome of a summation of random events and further whether they exhibit recurrent temporal regularities that are sufficiently well behaved to call them long waves in recent years there has been a strong resurgence of interest in such long term movements since their existence could provide a coherent explanation for the poor performance of capitalist economies over the past decade we do not attempt herein to examine the historical evidence for long cycles we have in fact examined this evidence and find it unconvincing although historical data might conceivably lend some plausibility to the notion of long cycles in prices we remain at present sceptical of the case that has so far been made for their presence in real phenomena that is in aggregate output or employment what we offer here instead consistent with our present scepticism is an attempt to examine the economic logic of long waves more specifically we ask what conditions would need to be fulfilled in order for technological innovation to generate long cycles of the periodicity postulated by n d kondratiev and his disciples it is our view that such a theory which might account for the presence of long cycles in some real economic variable would have to fulfill a set of logically interdependent requirements we discuss these requirements under the four categories of causality timing economywide repercussions and recurrence 1 causality

are there schumpeterian waves of innovations this paper responds to a recent criticism of the empirical evidence of bunching of innovations an examination of various long run innovation samples shows that there is indeed very poor evidence of innovation waves in the time before the mid 19th century thereafter however two long waves of major innovations occur both having a lead of approximately 10 15 years over the economic long wave as identified in an earlier study a t test confirms that these waves can be clearly distinguished from random fluctuations in the final section some suggestions for further research are outlined

the rise of clusters of innovative industries in belgium during the industrial epoch abstract this article presents the notion of cluster of innovative industries in order to analyse long term techno industrial change in belgium this notion accounts for strong and dynamic techno economic linkages interdependencies and complementarities that may occur between a set of industries for a particular period of time each cluster has its roots in a set of closely related major innovations that link particular industries to each other through a dynamic process of transfer and feedback of technology via various mechanisms we identified a number of 12 clusters of innovative industries that have emerged in the leading industrial countries since the first industrial revolution we also present empirical outcomes concerning the extent to which belgium participated in these clusters during the industrial epoch the belgian case shows that lagging countries are incapable of developing fully these clusters major components of the clusters were either missing or underdeveloped or they emerged with a considerable delay due to first mover advantages among other reasons

minimum wages and poverty in a developing country simulations from indonesia s household survey summary this study focuses on minimum wages income distribution and poverty taking indonesia as a case study a simulation approach assesses who benefits and who pays for minimum wage increases among the poor a minimum wages increase boosts net incomes for 21 of the households while it results in net losses to 79 of the households the impact is slightly less severe when there are job losses although minimum wage increases are mildly progressive the non poor pay a higher share of the costs they are unlikely to be an effective antipoverty instrument in developing countries like indonesia

forging ahead and falling behind the rise and relative decline of the first industrial nation this paper considers britain s failure to maintain its lead in economic growth in the face of overtaking by the united states recent cliometric research is reviewed and it is argued that early nineteenth century britain had a low growth potential by twentieth century standards and that the american growth of the early twentieth century was of a quite different kind neither traditional nor new growth theories can encompass this experience and it is suggested that natural resource endowments location specific learning processes and the international migration of factors of production were central aspects of american overtaking of britain

creating a cluster while building a firm entrepreneurs and the formation of industrial clusters feldman m p francis j and bercovitz j 2005 creating a cluster while building a firm entrepreneurs and the formation of industrial clusters regional studies39 129 141 the objective of the paper is to provide a theoretical model of cluster development that is informed by an appreciative interpretation of case studies it argues that entrepreneurs are a critical element in the formation of clusters entrepreneurs are important actors in the development of clusters as complex adaptive systems where the external resources associated with clusters are developed over time entrepreneurs who adapt to both constructive crises and new opportunities create the factors and conditions that facilitate their business interests and in turn contribute to the development of external resources the paper examines the initial factors that influence the decision to become an entrepreneur and examine how external factors influence the formation and location of high technology clusters feldman m p francis j

employment effects of two northwest minimum wage initiatives i introduction the impact of a minimum wage on employment has long been of interest to economists such as stigler 1946 because it provides a relatively direct test of a conventional theoretical prediction that a binding increase in the minimum wage should reduce employment among low skilled workers although this theoretical prediction has not gone unchallenged as in lester 1946 early empirical work summarized in brown gilroy and kohen 1983 confirmed theoretical predictions using aggregate time series data for young workers which indicated that a minimum wage has a small negative employment effect by 1990 there was general consensus in the profession that minimum wage laws reduced employment among teenage and low wage workers albeit by a small amount ehrenberg 1995 and others have argued that subsequent empirical evidence provides less confidence in both the conventional view that the minimum wage lowers teenage or low skilled employment and that neoclassical theory can account for the relationship between them for example card and krueger 1995 show in a 30 study meta analysis that past time series results are sensitive to the specification and suggest that when appropriately specified the minimum wage has had no significant effects on employment over the last 25 yr alternatively neumark and wascher 1998 find negative employment effects of the minimum wage consistent with structural change using time series data and specifications that do not suffer from the biases present in earlier work cross sectional studies as in currie and fallick 1996 burkhauser couch and wittenburg 2000 and neumark and wascher 2001 also find mixed evidence of employment effects on low wage workers due to the minimum wage thus traditional empirical assessments of the minimum wage yield mixed evidence on the employment impact of the minimum wage the natural experiment methodology was introduced as an alternative to the cross sectional and time series approaches and exploits both the time series wage variation before and after the treatment of a minimum wage increase and the cross sectional wage variation between the treatment state and a control state that did not experience a change in the minimum wage for example card and krueger 1994 analyzed employment growth in 410 fast food restaurants in new jersey and pennsylvania before and after the 1992 minimum wage increase in new jersey from 4 25 to 5 05 they find no evidence linking the increase in the minimum wage to reduced employment in fast food restaurants both when comparing new jersey with pennsylvania and when comparing impacted versus nonimpacted restaurants in new jersey neumark and wascher 2000 reexamine the impact of the 1992 new jersey minimum wage increase using payroll data for hours worked by fast food employees and bureau of labor statistics bls eating and drinking employment data and find that the minimum wage significantly reduced employment in new jersey versus pennsylvania thus even studies that apply similar natural experiment techniques and data for a given minimum wage treatment as in katz and krueger 1992 deere murphy and welch 1995 kim and taylor 1995 and card and krueger 2000 can yield different conclusions regarding its employment effect our empirical analysis exploits a unique natural experiment initiated by oregon and washington voter initiatives that raised the minimum wage over three successive years 1997 1999 in oregon and 1999 2001 in washington by approximately 37 in both states following prior work we focus on the eating and drinking industry sic 58 which is a low wage industry that has been extensively studied in prior work due to an expectation of a binding minimum wage bls wage data available between 1997 and 2001 indicate that the successive minimum wage increases become increasingly binding for most but not all eating and drinking jobs at the lower end of the wage distribution

contagion and trade why are currency crises regional abstract currency crises tend to be regional they affect countries in geographic proximity this suggests that patterns of international trade are important in understanding how currency crises spread above and beyond any macroeconomic phenomena we provide empirical support for this hypothesis using data for five different currency crises in 1971 1973 1992 1994 and 1997 we show that currency crises affect clusters of countries tied together by international trade by way of contrast macroeconomic and financial influences are not closely associated with the cross country incidence of speculative attacks

how do we know that real wages are too high it is common belief that the wages that we observe are above the level that would prevail in a competitive labour market and also it is common to believe that wage moderation should be encouraged as a way to keep unemployment down this paper considers whether we can have confidence in these beliefs it presents a number of models designed to cast doubt on the conventional wisdom first we show that in an efficiency wage model in which there is involuntary unemployment a binding minimum wage may increase employment we then present a general equilibrium matching model in which there is involuntary unemployment but wages are below market clearing levels and raising wages can reduce unemployment we then consider the empirical evidence on employment and wage determination to argue that it is just as consistent with this model as with models in which wages are at or above market clearing levels

exchange market pressure some caveats in empirical applications the exchange market pressure emp index developed by eichengreen et al 1994 is widely used as a tool to signal whether pressure on a currency is softened or warded off through monetary authorities interventions or rather a currency crisis has originated in this article we show how the index is sensitive to some assumptions behind the aggregation of the information available exchange rates interest rates and reserves especially when emerging countries are involved specifically we address the way exchange rate variations are computed and the impact of different definitions of the reserves and we question the constancy of the weights adopted these issues compound with the choice of a fixed threshold when crisis episodes are identified through the emp index as a result one should exert caution in subsequent econometric analyses where a dependent binary variable is built to identify crisis periods

do minimum wages affect non wage job attributes evidence on fringe benefits although many studies have tested neoclassical labor market theory s prediction that employers will react to binding minimum wages by reducing employment levels much less empirical research has explored the possibility that employers also respond to minimum wages by adjusting non wage components of the job such as fringe benefits job safety and access to training using current population survey data for 1979 2000 this study investigates the effect of minimum wage legislation on the provision of employer health insurance and employer pension coverage the authors examine effects of state and federal variation in minimum wages on groups likely to be affected by the minimum wage and compare these effects to estimates found for groups unlikely to be affected whether the analysis uses only state level variation or federal and state variation in minimum wages the results indicate no discernible effect of the minimum wage on fringe benefit generosity for low skill workers

leading indicators of fiscal distress evidence from extreme bounds analysis early warning systems ewss are widely used to assess a country s vulnerability to fiscal distress a fiscal distress episode is identified as a period when government experiences extreme funding

the effect of minimum wages on immigrants employment and earnings this study examines how minimum wage laws affect the employment and earnings of low skilled immigrants and natives in the u s minimum wage increases might have larger effects among low skilled immigrants than among natives because on average immigrants earn less than natives due to lower levels of education limited english skills and less social capital results based on data from the current population survey for the years 1994 2005 do not indicate that minimum wages have adverse employment effects among adult immigrants or natives who did not complete high school however low skilled immigrants may have been discouraged from settling in states that set wage floors substantially above the federal minimum jel classifications j23 j38 j15

minimum wages and poverty will a 9 50 federal minimum wage really help the working poor using data drawn from the march current population survey we find that state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates when we then simulate the effects of a proposed federal minimum wage increase from 7 25 to 9 50 per hour we find that such an increase will be even more poorly targeted to the working poor than was the last federal increase from 5 15 to 7 25 per hour assuming no negative employment effects only 11 3 of workers who will gain live in poor households compared to 15 8 from the last increase when we allow for negative employment effects we find that the working poor face a disproportionate share of the job losses our results suggest that raising the federal minimum wage continues to be an inadequate way to help the working poor

towards a new early warning system of financial crises abstract this paper develops a new early warning system ews model based on a multinomial logit model for predicting financial crises it is shown that commonly used ews approaches which use binomial discrete dependent variable models are subject to what we call a post crisis bias this bias arises when no distinction is made between tranquil periods when economic fundamentals are largely sound and sustainable and crisis post crisis periods when economic variables go through an adjustment process before reaching a more sustainable level or growth path we show that applying a multinomial logit model which allows distinguishing between more than two states is a valid way of solving this problem and constitutes a substantial improvement in the ability to forecast financial crises the empirical results reveal that for a set of 20 open emerging markets for the period 1993 2001 the model would have correctly predicted a large majority of crises in emerging markets

are the effects of minimum wage increases always small new evidence from a case study of new york state the authors estimate the effect of the 2004 6 new york state nys minimum wage increase from 5 15 to 6 75 per hour on the employment rates of 16 to 29 year olds who do not have a high school diploma using data drawn from the 2004 and 2006 current population survey they employ difference in difference estimates to show that the nys minimum wage increase is associated with a 20 2 to 21 8 reduction in the employment of less skilled less educated workers with the largest effects on those aged 16 to 24 their estimates imply a median employment elasticity with respect to the minimum wage of around 0 7 large relative to previous researchers estimates the authors findings are robust to their choice of geographically proximate comparison states the use of a more highly skilled within state comparison group and a synthetic control design approach moreover their results provide plausible evidence that state minimum wage increases can have substantial adverse labor demand effects for low skilled i

efficiency wages employment versus welfare this paper analyzes the effects of government policies in an efficiency wage model in such a model wages exceed market clearing rates firms may pay high wages for many reasons levine gives thirteen motivations for efficiency wages 12 in the model used here high wages prevent shirking by workers the model is similar to those of shapiro and stiglitz sparks fairris and alston and others 15 17 7 efficiency wage models are often viewed as providing the microeconomic foundations of involuntary unemployment and keynesian economics 1 2 unemployment is also emphasized in many discussions of government policies 3 4 11 a major example is that of johnson and layard 9 they find that a per capita employment subsidy financed by an ad valorem wage rate tax would reduce unemployment they conclude that this policy would benefit a country because of the employment effect 2 yet this paper shows that the employment effect is misleading here a policy that causes employment to rise fall also must cause income net of effort to fall rise so total welfare falls rises the policy implications discussed by johnson and layard and others are therefore reversed

endogenous growth cycles current explanations why a growing economy necessarily goes through periods of high and low growth predict countercyclical r d investment as this is very controversial from an empirical perspective a stochastic poisson model of endogenous growth cycles is presented where the determinants of the cyclical behaviour of r d investment are analytically studied providing an explicit expression for the expected length of a cycle shows that high frequency fluctuations can indeed be understood by this approach it is also shown how small technological improvements translate into large aggregate fluctuations

predicting currency crises abstract in recent years a number of researchers have claimed success in systematically predicting which countries are more likely to suffer currency crises most notably kaminsky lizondo and reinhart 1998 this paper evaluates the klr approach to anticipating currency crises and develops and tests an alternative first we try to answer the question if we had been using the klr model in late 1996 how well armed would we have been to predict the asia crisis second we analyze a more general probit based model of predicting currency crises in the process we test several basic assumptions underlying the indicators approach

exchange market mayhem the antecedents and aftermath of speculative attacks exchange market mayhem the antecedents and aftermath of speculative attacks this paper evaluates the causes and consequences of episodes of turbulence in foreign exchange markets using data from 1959 through 1993 for twenty oecd countries we consider the antecedents and aftermath of devaluations and revaluations flotations fixings and speculative attacks which may not be successful we find that realignments of fixed exchange rates are alike devaluations are preceded by political instability budget and current account deficits and fast growth of money and prices revaluations are mirror images of devaluations speculative attacks resemble devaluations but money growth and inflation are more endemic and there is no last minute attempt to tighten monetary policy in contrast few consistent correlations link regime transitions like flotations or fixings to macroeconomic or political variables transitions between exchange rate regimes are largely idiosyncratic and are neither consistently provoked ex ante by systematic imbalances nor typically justified ex post by subsequent changes in policy we conclude that there are no clear early warning signals of many speculative attacks and no easy solutions for policy makers barry eichengreen andrew k rose and charles wyplosz

when good measurement goes wrong new evidence that new york state s minimum wage reduced employment hoffman s 2015 replication of sabia burkhauser and hansen sbh 2012 suggests that unlucky measurement error in low skilled employment in the current population survey outgoing rotation group

minimum wage laws what does an employment increase imply about output and welfare abstract card and krueger find empirically that minimum wage laws may increase employment the current paper seeks the analytical implications of employment increasing minimum wages for output and welfare the standard supply and demand model cannot be used for this purpose one needs a model in which employment increasing minimum wages are at least possible such as this paper s efficiency wage model here an employment increase is neither necessary nor sufficient for expected welfare gains for either employed or unemployed workers an employment increasing minimum wage raises output but unambiguously lowers labor force participation and hurts those who remain unemployed

schumpeterian patterns of innovation are technology specific this paper examines the patterns of innovative activities at the technological and country levels using patent data for 49 technological classes in six countries usa japan germany france united kingdom and italy it is shown that the patterns of innovative activities differ systematically across technological classes but are remarkably similar across countries for each technological class in particular two groups of technological classes are identified schumpeter mark i and schumpeter mark ii in these two groups innovative activities are structured and organized in different ways the first represents a widening pattern concentration of innovative activities is low innovators are of small economic size stability in the ranking of innovators is low and entry of new innovators is high the second represents a deepening pattern concentration of innovative activities is higher than in the first group innovators are of larger economic size stability in the ranking of innovators is greater and entry is lower the former group comprises mechanical technologies and traditional sectors while the latter includes chemicals and electronics this result suggests that technology related factors such as technological regimes defined in terms of conditions of opportunity appropriability cumulativeness and properties of the knowledge base play a major role in determining the specific pattern of innovative activities of a technological class across countries within these constraints country specific factors introduce differences across countries in the pattern of innovative activities for a specific technological class finally the relationships between the specific features of the patterns of innovative activities and international technological specialization are examined technological advantages appear in general to be linked to higher degrees of asymmetries among innovators higher stability of the ranking of innovators smaller economic size of the innovating firms and lower entry rates of new innovators these relationships however are different in the two groups of technological classes in schumpeter mark i widening technological classes international technological specialization is associated with relatively higher degrees of asymmetries among innovators and entry of new innovators as well as smaller firm size while in schumpeter ii deepening technological classes international technological specialization is linked to the existence of a stable but competitive core of persistent innovators

bad eggs learning by doing and the choice of technology we model long run economic development through technology adoption under scientific uncertainty about environmental effects there are four possible long run equilibria in a socially planned economy high growth adopt rapidly but abandon damaging technologies once revealed ddt cfcs cautious brake the introduction of new technologies to avoid mistakes genetically modified organisms no growth halt technological progress to preserve secondary knowledge and collapse adopt rapidly without ever abandoning damaging technologies in the base parameterization a short sighted social planner chooses the cautious strategy a far sighted planner chooses the high growth strategy unless damages are irreversible in which case the cautious strategy again dominates regulatory options in the market economy are investigated pollution taxes do not affect the firm s level of precaution if they can only be applied after the adopting firm has reaped the benefits however they do encourage the abandonment of damaging technologies liability rules do affect precaution but may lead to excessive caution or even a no growth trap

did established early warning signals predict the 2008 crises abstract over the past 60 years a voluminous literature has painstakingly developed crises theories and their associated early warning signals the hallmark of this literature is the consistency with which selected early warning signals such as the level of reserves and exchange rate appreciations are presumed to predict different types of crises across countries and time the diversity of crises theories that motivate early warning signals presents however a challenge to empirical implementations given that the true model of early warning signals is unknown omitted variable bias contaminates estimates and confidence levels when the uncertainty surrounding a particular theory has been ignored after addressing model uncertainty in early warning signal regressions using an extended version of frankel and saravelos 2012 j int econ 87 216 231 dataset we do not find a single early warning signal that alerts to all dimensions of the 2008 crisis instead distinct sets of early warning signals identify different dimensions of the crisis banking balance of payments exchange rate pressure and recession

the origins of american industrial success 1879 1940 the united states became the world s preeminent manufacturing nation at the turn of the twentieth century this study considers the bases for this success by examining the factor content of trade in manufactured goods surprisingly the most distinctive characteristic of u s manufacturing exports was intensity in nonreproducible natural resources furthermnore this relative intensity was increasing between 1880 and 1920 the study then asks whether resource abundance reflected geological endowment or greater exploitation of geological potential it was mainly the latter jel 042 recent thinking about american economic performance has been marked by alarm over the country s loss of its competitive edge most of this discussion is not rooted in an understanding of the historical origins of the economic leadership now thought to be in jeopardy modern economists tend to assume that the american advantage has been technological and

constructing regional advantage platform policies based on related variety and differentiated knowledge bases asheim b t boschma r and cooke p constructing regional advantage platform policies based on related variety and differentiated knowledge bases regional studies this paper presents a regional innovation policy model based on the idea of constructing regional advantage this policy model brings together concepts like related variety knowledge bases and policy platforms related variety attaches importance to knowledge spillovers across complementary sectors the paper categorizes knowledge into analytical science based synthetic engineering based and symbolic arts based in nature with different requirements of virtual and real proximity mixes the implications of this are traced for evolving platform policies that facilitate economic development within and between regions in action lines appropriate to incorporate the basic principles behind related variety and differentiated knowledge bases asheim b t boschma r and cooke p

the state federal dichotomy in the effects of minimum wages on teenage employment in the united states abstract for the period 1984 1997 we find that state level minimum wage hikes had no negative employment impact whereas federal hikes did this dichotomy may account for the differences between the results of the new economics of the minimum wage and time series studies

the response of hours of work to increases in the minimum wage this paper examines the effect of minimum wage increases on the hours of work of teenagers ages 16 to 19 using monthly data from the current population survey our findings are consistent with the prediction from neoclassical theory that minimum wage increases have a negative effect on labor demand however the estimates we provide here for the elasticity of hours of teen labor demanded with respect to the minimum wage suggest that alternative estimates based on aggregate employment consistently understate the total impact of minimum wage increases on teenage labor utilization

minimum wage effects in the longer run exposure to minimum wages at young ages could lead to adverse longer run effects via decreased labor market experience and tenure and diminished education and training while beneficial longer run effects could arise if minimum wages increase skill acquisition evidence suggests that as individuals reach their late 20s they earn less the longer they were exposed to a higher minimum wage at younger ages and the adverse longer run effects are stronger for blacks if there are such longer run effects of minimum wages they are likely more significant than the contemporaneous effects on youths that are the focus of research and policy debate

comment on david neumark and william wascher employment effects of minimum and subminimum wages panel data on state minimum wage laws in their article published in the minimum wage research symposium in the october 1992 issue of this journal industrial and laborrelations review volume 45 number 1 pp 55 81 david neumark and william wascher claim to find empirical support for three propositions 1 a higher minimum wage leads to a lower teenage employmentpopulation rate 2 the effect of the minimum wage on employment can be seen within a year but becomes stronger after two years and 3 in states with legal subminimum wages a significant fraction of teenage employees are paid a subminimum wage and the availability of a subminimum wage blunts the disemployment effect of the minimum wage the same symposium contains three papers by us that present empirical evidence suggesting conclusions opposite those of neumark and wascher 1 since neumark and