The New Minimum Wage Research

This article highlights some of the research in the authors ’ forthcoming book, What Does the Minimum Wage Do?, which will be available in June. To preorder the book, visit www.upjohninstitute.org/Publications/Titles/ WhatDoestheMinimumWageDo. What is now known as the new minimum wage research got its start at a conference at Cornell University in 1991. In the 10 years leading up to the conference, the number of articles studying the minimum wage as a share of all articles in economics had risen by 28 percent; in the subsequent 10 years, that increase was 81 percent. How did this conference stimulate the phenomenal growth of research on the minimum wage? By showing that minimum wage research could both ride and reinforce several new trends in economics regarding types of data analyzed, analytic approaches, and theories for understanding the data. Most empirical research prior to the conference had relied on data aggregated to the national level not only because of issues of data availability and low computational power, but also because the federal minimum wage was the effective minimum wage in almost every state. The paucity of increases in the federal minimum wage during the decade before the conference had led to greater variation in state minimum wages, and the rapid increase in computational power meant that it was no longer especially burdensome to analyze data that incorporated state-level variation. In the wake of these developments, Neumark and Wascher (1992) used the conference to introduce national state-level panels into research on the employment impact of the minimum wage, extending their analysis in later work to relate the employment consequences to other economic decisions, such as school enrollment (Neumark and Wascher 1995a,b; 1996). Pursuing a different tack, Card (1992a,b)