NJ and PA Once Again: What Happened to Employment When the PA–NJ Minimum Wage Differential Disappeared?
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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.
Keywordsminimum wage Card–Krueger
JEL ClassificationsJ010 J080 J780
The authors thank the referees and editor of this journal for their helpful suggestions.
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