NJ and PA Once Again: What Happened to Employment When the PA–NJ Minimum Wage Differential Disappeared?
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- Hoffman, S. & Trace, D. Eastern Econ J (2009) 35: 115. doi:10.1057/eej.2008.1
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Card and Krueger's analysis of the impact of the 1992 increase in the New Jersey (NJ) state minimum wage on employment in fast-food restaurants in NJ and Pennsylvania (PA) is very well known. In 1996 and 1997, the federal minimum wage was increased from $4.25 to $5.15, thereby increasing the minimum wage by $0.90 in PA but by just $0.10 in NJ. We use CPS data to examine the impacts of this increase on employment of likely minimum wage workers in the two states, using DID and DIDID estimators that exploit within-state and between-state comparisons. We find consistent evidence that employment of “at-risk” groups was negatively affected in PA relative to other groups in PA and to comparable groups in NJ.