tailieunhanh - Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania

Total public spending on lighting crime can be reduced, while keeping the mathematically expected punishment unchanged, by offsetting a cut in expenditures on catching criminals with a sufficient increase in the punish- ment to those convicted. However, risk-preferring individuals are more deterred from crime by a higher probability of conviction than by severe punishments. Therefore, optimal behavior by the State would balance the reduced spending on police and courts from lowering the probability of conviction against the preference of risk-preferring criminals for a lesser certainty of punishment. The State should also consider the likelihood of punishing innocent persons | Minimum Wages and Employment A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania By David Card and Alan B. Krueger On April 7 1992 New Jersey s minimum wage rose from to per hour. To evaluate the impact of the law we surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise. Comparisons of employment growth at stores in New Jersey and Pennsylvania where the minimum wage was constant provide simple estimates of the effect of the higher minimum wage. We also compare employment changes at stores in New Jersey that were initially paying high wages above 5 to the changes at lower-wage stores. We find no indication that the rise in the minimum wage reduced employment. JEL J30 J23 How do employers in a low-wage labor market respond to an increase in the minimum wage The prediction from conventional economic theory is unambiguous a rise in the minimum wage leads perfectly competitive employers to cut employment George J. Stigler 1946 . Although studies in the 1970 s based on aggregate teenage employment rates usually confirmed this prediction 1 earlier studies based on comparisons of employment at affected and unaffected establishments often did not . Richard A. Lester 1960 1964 . Several re Department of Economics Princeton University Princeton NJ 08544. We are grateful to the Institute for Research on Poverty University of Wisconsin for partial financial support. Thanks to Orley Ashenfelter Charles Brown Richard Lester Gary Solon two anonymous referees and seminar participants at Princeton Michigan State Texas A M University of Michigan University of Pennsylvania University of Chicago and the NBER for comments and suggestions. We also acknowledge the expert research assistance of Susan Belden Chris Burris Geraldine Harris and Jonathan Orszag. See Charles Brown et al. 1982 1983 for surveys of this literature. A recent update Allison J. Wellington 1991 concludes that the employment effects of the .

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