The employment effect of minimum wage using 77 international studies since 1992: A meta-analysis

Chletsos, Michael and Giotis, Georgios P. (2015): The employment effect of minimum wage using 77 international studies since 1992: A meta-analysis.

Abstract

Until the early 90’s a strong consensus existed among economists that minimum wage has negative employment effects. However, in 1992, the studies by Card (1992a) and Katz and Krueger (1992), who found insignificant and slightly positive effects, respectively, came to create a schism. Since then a divergence of views expressed by conflicting empirical studies exists in the literature. In our paper, we use a meta-sample of 77 international studies from 18 countries to investigate this relationship. Our analysis suggests that there is evidence of publication selection, but no effect of minimum wages on employment measures. Additionally, using 27 moderators as potential explanatory variables in order to explain the variation among studies, we find that study characteristics related to the data, the model specifications and the group concerned, diversify the degree of the effect.

• Item Type: MPRA Paper
• Language: English
• Keywords: Minimum wage, Employment, Meta-analysis.
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy

References

Adam, A., Kammas, P. and Lagou, A. (2013) The effect of globalization on capital taxation: What have we learned after 20 years of empirical studies? Journal of Macroeconomics 35(3): 199-209.

Belman, D. L. and Wolfson, P. (2014) What Does the Minimum Wage Do? Upjohn Institute Press.

Benos, N. and Zotou, S. (2014) Education and economic growth: A meta-regression analysis. World Development 64: 669-89.

Boockman, B. (2010) The combined employment effects of minimum wages and labor market regulation: A meta-analysis. IZA Discussion Paper, No. 4983.

Card, D. (1992a) Do minimum wages reduce employment? A case study of California, 1987-1989. Industrial and Labor Relations Review 46(1): 38-54.

Card, D. and Krueger, A. B. (1995) Time-series minimum wage studies: A meta-analysis. American Economic Review 85(2): 238-43.

Charemza, W. and Deadman, D. (1997) New directions in econometric practice. 2nd Edition. Cheltenham: Edward Elgar.

Doucouliagos, C. H. and Stanley, T. D. (2009) Publication selection bias in minimum-wage research? A meta-regression analysis. British Journal of Industrial Relations 47: 406-28.

Efendic, A., Pugh, G. and Adnett, N. (2011) Institutions and economic performance: a meta-regression analysis. European Journal of Political Economy 27: 586-99.

Leonard, M., Stanley, T. D. and Doucouliagos, H. (2014) Does the UK minimum wage reduce employment? A meta-regression analysis. British Journal of Industrial Relations 52(3): 499-520. Mavridis, D. and Salanti, G. (2012) A practical introduction to multivariate meta-analysis. Statistical Methods in Medical Research 21(1): 1-26.

Nataraj, S., Perez-Arce, F. Srinivasan, S. V. and Kumar, K. B. (2014) The impact of labor market regulation on employment in low-income countries: A meta- analysis. Journal of Economic Surveys 28(3): 551-72.

Stanley, T. D., Doucouliagos, C. and Jarrell, S. (2008) Meta-regression analysis as the socioeconomics of economics research. The Journal of Socio-Economics 37: 276-92.

Stanley, T. D. and Doucouliagos, C. (2012) Meta-regression analysis in economics and business. Routledge Advances in Research Methods.

Sutton, A. J., Abrams, K. R., Jones, D. R., Sheldon, T. A. and Song, F. (2000) Methods for meta-analysis in medical research. Wiley.