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UMass Amherst Economists Examine Impact of Minimum-wage Increases on Jobs

AMHERST — Economists at UMass Amherst, along with colleagues from University College London and the Economic Policy Institute, have found that the overall number of low-wage jobs remained essentially unchanged over the five years following increases to the minimum wage, and that affected low-wage workers overall saw a wage gain of 7% after a minimum-wage increase. These spillovers extended up to $3 above the minimum wage and represent around 40 percent of the overall wage increase from minimum wage changes.

The authors also found that, within the scope of minimum wages they studied — which range between 37% and 59% percent of the median wage – there was no evidence of job losses even at the higher end of this scale. These findings, the researchers say, suggest minimum wages are mostly having the intended effect of raising bottom wages with little adverse, unintended consequences on jobs.

The research into the impacts of 138 prominent state-level minimum-wage changes in the U.S. between 1979 and 2016 was conducted by Arindrajit Dube, professor of Economics at UMass Amherst; Doruk Cengiz, a doctoral student in Economics at UMass Amherst; Attila Lindner of University College London; and Ben Zipperer of the Economic Policy Institute. Their report, “The Effect of Minimum Wages on Low-Wage Jobs,” was published in the August edition of the Quarterly Journal of Economics.

“Our study provides a comprehensive analysis of how minimum wages affect overall low-wage employment — the first paper on this topic in the QJE since the advent of new minimum-wage research in the early 1990s,” Dube said. “The approach we develop here will be very useful to track the effect on jobs and wages as policymakers explore more ambitious minimum-wage policies at the state and federal level.

“These findings are relevant,” he went on, “as many states currently are experimenting with more ambitious minimum-wage policies, and as the House of Representatives recently passed legislation to substantially increase the federal minimum wage.”

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