Eddielogic

– Thoughts on Strategy and Management

86 studies on minimum wages

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Today I found an interesting review concerning an economic issue. Well, it is not related to corporate strategy; instead it could be argued that it is more related to an economic strategy. Its title is MINIMUM WAGES AND EMPLOYMENT: A REVIEW OF EVIDENCE FROM THE NEW MINIMUM WAGE RESEARCH by David Neumark (University of California at Irvine) and William Wascher (Research and Statistics at the Board of Governors of the Federal Reserve System).

Both authors describe the entire effect of minimum wages on the employment in the low wages sector. Their result: A consensus about those effects does not exist today. There are different studies available. Taking into account different nations, research methodology, and time frame various effects can be identified: clear positive, neutral or even clear negative effects. In the USA negative effects can not be observed, since the labour market is more flexible. Opposite to this negative effects can be observed in France.
Neumark and Wascher summarize that in general the majority of empirical analysis (2/3 of 86 studies) submits consistent signs (which are not significant in statistical terms sometimes) for negative effects on employment situation. 

Oh, I forget to mention that in Germany we discuss the introduction of a general minimum wage…

Other blogs discuss this issue as well.

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