Co-funded with the MacArthur Foundation
Today, twenty-six states and the District of Columbia have a higher minimum wage than the $7.25 federal minimum wage, which has not been raised since 2009. A proposal by the Obama administration that would increase the federal minimum wage to $10.10 per hour, indexed to inflation, has stalled in Congress. The argument frequently raised against increasing the minimum wage is that it raises labor costs and lowers employment, and conflicting evidence has led economists continue to disagree on whether past minimum wage increases led to fewer jobs at the bottom of the labor market.
Economist Arindrajit Dube, who has been at the forefront of new minimum wage research, will undertake two projects to assess the contradictory findings in the recent literature. One will utilize and build upon the synthetic control method introduced by Alberto Abadie and others for constructing a counterfactual to estimate the impact of a change in minimum wage policy. The other project will use synthetic comparison groups identified in the first project to estimate the medium-range impact of minimum wage increases on a variety of outcomes, including employment levels and employment growth, as well as job creation and destruction rates.