minimum wages and training revisited theory predicts that minimum wages will reduce employer provided on the job training designed to improve workers skills on the current job but it is ambiguous regarding training that workers obtain to qualify for a job we estimate the effects of minimum wages on both types of training received by young workers exploiting cross state variation in minimum wage increases much of the evidence supports the hypothesis that higher minimum wages reduce formal training to improve skills on the current job but there is little or no evidence of offsetting increases in training undertaken to qualify for or obtain jobs

price pass through and the minimum wage this paper tests a textbook consequence of competitive markets that an industry wide increase in the price of labor is passed on to consumers through an increase in prices using several data sources on restaurant prices i explore the price impact of minimum wage hikes in canada and the united states particular attention is paid to the timing of these price responses to gauge the stickiness of minimum wage cost shocks i find that restaurant prices generally rise with changes in the wage bill and that this response is concentrated in the quarter surrounding the month during which the legislation is enacted

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

the minimum wage restaurant prices and labor market structure using store level and aggregated consumer price index data we show that restaurant prices rise in response to minimum wage increases under several sources of identifying variation we introduce a general model of employment determination that implies minimum wage hikes cause prices to rise in competitive labor markets but potentially fall in monopsonistic environments furthermore the model implies employment and prices are always negatively related therefore our empirical results provide evidence against the importance of monopsony power for understanding small observed employment responses to minimum wage changes our estimated price responses challenge other explanations of the small employment response too

minimum wage effects on labor market outcomes under search matching and endogenous contact rates building upon a continuous time model of search with nash bargaining in a stationary environment we analyze the effect of changes in minimum wages on labor market outcomes and welfare although minimum wage increases may or may not lead to increases in unemployment in our model they can be welfare improving to labor market participants on both the supply and demand sides of the labor market we discuss identification of the model using current population survey data on accepted wages and unemployment durations and show that by incorporating a limited amount of information from the demand side of the market it is possible to obtain credible and precise estimates of all primitive parameters we show that the optimal minimum wage in 1996 depends critically on whether or not contact rates can be considered to be exogenous and we note that the limited variation in minimum wages makes testing this assumption problematic

sticky prices new evidence from retail catalogs this paper presents new results on the size frequency and synchronization of price changes for twelve selected retail goods over the past 35 years three basic facts about the data are uncovered first nominal prices are typically fixed for more than one year although the time between changes is very irregular second prices change more often during periods of high overall inflation third when prices do change the sizes of the changes are widely dispersed both large and small changes occur for the same item and the sizes of these changes do not closely depend on overall inflation

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 effects of conventional and unconventional monetary policy on exchange rates abstract what are the effects of monetary policy on exchange rates and have unconventional monetary policies changed the way monetary policy is transmitted to international financial markets according to conventional wisdom expansionary monetary policy shocks in a country lead to that country s currency depreciation we revisit the conventional wisdom during both conventional and unconventional monetary policy periods in the us by using a novel identification procedure that defines monetary policy shocks as changes in the whole yield curve due to unanticipated monetary policy moves and allows monetary policy shocks to differ depending on how they affect agents expectations about the future path of interest rates as well as their perceived effects on the riskiness uncertainty in the economy our empirical results show that i a monetary policy easing leads to a depreciation of the country s spot nominal exchange rate in both conventional and unconventional periods ii however there is substantial heterogeneity in monetary policy shocks over time and their effects depend on the way they affect agents expectations iii we find favorable evidence to dornbusch s 1976 overshooting hypothesis iv changes in expected real interest rates play an important role in the transmission of monetary policy shocks

the effect of the minimum wage on the fast food industry using a longitudinal survey of fast food restaurants in texas the authors examine the impact of recent increases in the federal minimum wage on a low wage labor market less than 5 of fast food restaurants were using the new youth subminimum wage in july august 1991 even though the vast majority paid a starting wage below the new hourly minimum wage immediately before it became effective although some restaurants increased wages beyond the level needed to comply with higher minimum wages in both 1990 and 1991 those federal minimum wage increases greatly compressed the distribution of starting wages in the texas fast food industry two findings at variance with conventional predictions are that 1 employment increased more in those firms likely to have been most affected by the 1991 minimum wage increase than in other firms and 2 price changes were unrelated to mandated wage changes

economic reform and aggregate cropping patterns for egypt abstract beginning in the early 1980s the government of egypt embarked on an aggressive initiative to progressively change its centrally planned economy to a system more dependent on domestic and international markets the agriculture and food sectors have taken the lead in the economic reforms this paper investigates changes in egyptian cropping patterns as an indicator of the success of the transition toward a more market oriented economy first trends in cultivated area and gross margins during the economic reforms are described responses of cropping patterns to changes in gross margins are then evaluated a random effect distributed lag model with pooled cross sectional time series methods is used to examine the relationship for individual crops canonical correlation analysis provides a more general assessment of responsiveness of the overall cropping pattern

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

economists views about parameters values and policies survey results in labor and public economics specialists in labor economics and public economics at 40 leading research universities provided opinions of policy proposals quantitative best estimates and 95 percent confidence intervals for economic parameters and answers to values questions regarding income redistribution efficiency versus equity and individual versus social responsibility their positions on policy are more closely related to their values than to their estimates of relevant economic parameters average best estimates of the economic parameters agree well with the relevant literature but individual best estimates are usually widely dispersed the individual 95 percent confidence intervals are much narrower than the substantial cross respondent variation in estimates would warrant

the elusive effects of minimum wages the main theme of david card and alan krueger s book myth and measurement the new economics of the minimum wage is that the data do not support the view that minimum wages reduce employment the most important chapter considers data for the fast food industry where it is suggested that recent minimum wage increases may actually have increased employment contrary to the standard theorem that labor demand curves slope down a more reasonable view of the evidence in this book and in many other studies going back to 1915 is that the employment effects of minimum wages are small and difficult to detect in the noisy data available

minimum wages for ronald mcdonald monopsonies a theory of monopsonistic competition recent empirical work on the effects of minimum wages has called into question the conventional wisdom that minimum wages invariably reduce employment we develop a model of monopsonistic competition with free entry to analyse the effects of minimum wages and our predictions fit the empirical results closely under monopsonistic competition we find that a rise in the minimum wage raises employment per firm causes firm exit and may increase or reduce industry employment minimum wages increase welfare if they raise industry employment but welfare effects are ambiguous if employment falls

the minimum wage do moderate increases in the minimum wage reduce employment if not do they nevertheless raise wages to examine these questions we apply techniques of time series analysis and systems estimation that are commonly used in macroeconomics and finance to five panels of data that contain between 11 and 34 low wage industries our answers are no and yes respectively we find that increases in the federal minimum wage between 1947 and 1997 have raised average wages in many of these industries especially the lowest wage ones the effect on employment however is mixed and typically nonsignificant even when average wages have risen

real exchange rate fluctuations and the dynamics of retail trade industries on the u s canada border consumers living near the u s canada border can shift their expenditures between the two countries so real exchange rate fluctuations can act as demand shocks to border areas retail trade industries using annual county level data we estimate the effects of real exchange rates on the number of establishments and their average payroll in border counties for four retail industries in three of the four industries we consider the number of operating establishments responds either contemporaneously or with a lag of one year to real exchange rate movements for these industries the response of retailers average size is less pronounced the rapid response of net entry is inconsistent with any model of persistent deviations from purchasing power parity that depends on retailers costs of changing nominal prices

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

minimum wages in a low wage labour market care homes in the uk this paper studies the economic effects of minimum wages in a sector that is very vulnerable to minimum wage legislation the uk care homes sector we study the effects of the introduction of the national minimum wage nmw in april 1999 on wages and employment before and after minimum wage introduction and before and after the subsequent increase of the minimum wage in october 2001 we also study home closures between 1999 and 2001 the results show sizeable wage effects and some evidence of employment reductions but we are unable to detect any effect on home closure

the employment effect in retail trade of california s 1988 minimum wage increase in this article we study the labor market effect of california s 1988 minimum wage increase in the retail trade industry two different approaches to evaluating the minimum wage effects suggest that the textbook economic analysis of minimum wages pertains employment growth in california s low wage retail trade sector appears to have been tempered by the minimum wage increase

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

how firms construct price changes evidence from restaurant responses to increased minimum wages we use price data underlying the consumer price index to assess how restaurants whose prices are generally quite sticky respond to minimum wage increases aggregate prices rise quickly by amounts reflecting the increase in costs and they rise more among fast food outlets and in low wage locations but restaurants do not construct price increases by raising all their prices by amounts reflecting the increase in wages instead they raise only some prices but by larger amounts prices at cluster points are less likely to be changed and prices that were recently increased decreased are less more likely to be raised

an empirical equilibrium search model of the labor market in structural empirical models of labor market search the distribution of wage offers is usually assumed to be exogenous however because in setting their wages profit maximizing firms should consider the reservation wages of job seekers the wage offer distribution is essentially endogenous we investigate whether a proposed equilibrium search model in which the wage offer distribution is endogenous is able to describe observed labor market histories we find that the distributions of job and unemployment spells are consistent with the data and that the qualitative predictions of the model for the wages set by employers are confirmed by wage regressions the model is estimated using panel data on unemployed and employed individuals we distinguish between separate segments of the labor market and we show that productivity heterogeneity is important to obtain an acceptable fit to the data the results are used to estimate the degree of monopsony power of firms further the effects of changes in the mandatory minimum wage are examined

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association