Minimum Wages and Employment: a Case Study of the
Minimum Wages and Employment: A Case Study of the
Fast-Food Industry in New Jersey and Pennsylvania: Reply
By
DAVID CARD AND ALAN B. KRUEGER*
Replication and reanalysis are important endeavors in economics, especially when new findings run counter to conventional wisdom. In their
Comment on our 1994 American Economic Review article, David Neumark and William Wascher
(2000) challenge our conclusion that the
April 1992 increase in the New Jersey minimum wage led to no loss of employment in the fast-food industry. Using data drawn from payroll records for a set of restaurants initially assembled by Richard
Berman of the Employment Policies Institute
(EPI) and later supplemented by their own datacollection efforts, Neumark and Wascher (hereafter,
NW) conclude that “... the New Jersey minimum-wage increase led to a relative decline in fast-food employment in New Jersey” compared to Pennsylvania.1 They attribute the discrepancies between their findings and ours to problems in our fast-food restaurant data set. Specifically, they argue that our use of employment data derived from telephone surveys, rather than from payroll records, led us to draw faulty inferences about the effect of the New Jersey minimum wage. In this paper we attempt to reconcile the contrasting findings by analyzing administrative employment data from a new representative sample of fast-food employers in New Jersey and Pennsylvania, and by reanalyzing NW’s data. Most importantly, we use the Bureau of
Labor Statistics’s (BLS’s) employer-reported
ES-202 data file to examine employment growth of fast-food restaurants in a set of major chains in New Jersey and nearby counties of
Pennsylvania.2 We draw two samples from the
ES-202 files: a longitudinal file that tracks a fixed sample of establishments between 1992 and 1993, and a series of repeated cross sections from the end of 1991 through 1997. Because the
BLS data are derived from unemploymentinsurance
(UI)
Fast-Food Industry in New Jersey and Pennsylvania: Reply
By
DAVID CARD AND ALAN B. KRUEGER*
Replication and reanalysis are important endeavors in economics, especially when new findings run counter to conventional wisdom. In their
Comment on our 1994 American Economic Review article, David Neumark and William Wascher
(2000) challenge our conclusion that the
April 1992 increase in the New Jersey minimum wage led to no loss of employment in the fast-food industry. Using data drawn from payroll records for a set of restaurants initially assembled by Richard
Berman of the Employment Policies Institute
(EPI) and later supplemented by their own datacollection efforts, Neumark and Wascher (hereafter,
NW) conclude that “... the New Jersey minimum-wage increase led to a relative decline in fast-food employment in New Jersey” compared to Pennsylvania.1 They attribute the discrepancies between their findings and ours to problems in our fast-food restaurant data set. Specifically, they argue that our use of employment data derived from telephone surveys, rather than from payroll records, led us to draw faulty inferences about the effect of the New Jersey minimum wage. In this paper we attempt to reconcile the contrasting findings by analyzing administrative employment data from a new representative sample of fast-food employers in New Jersey and Pennsylvania, and by reanalyzing NW’s data. Most importantly, we use the Bureau of
Labor Statistics’s (BLS’s) employer-reported
ES-202 data file to examine employment growth of fast-food restaurants in a set of major chains in New Jersey and nearby counties of
Pennsylvania.2 We draw two samples from the
ES-202 files: a longitudinal file that tracks a fixed sample of establishments between 1992 and 1993, and a series of repeated cross sections from the end of 1991 through 1997. Because the
BLS data are derived from unemploymentinsurance
(UI)
References: Princeton University Press, 1995. MA: MIT Press, 1996. December 21, 1992, p. 7. 2000, 90(5), pp. 1362–96.