Effects of the Minimum Wage on Employment Dynamics

Source: Jonathan Meer, Jeremy West, Texas A&M University, July 2013

From the abstract:
The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. For both theoretical and econometric reasons, we argue that the effect of the minimum wage should be more apparent in new employment growth than in employment levels. In addition, we conduct a simulation showing that the common practice of including state-specific time trends will attenuate the measured effects of the minimum wage on employment if the true effect is in fact on the rate of job growth. Using a long state-year panel on the population of private-sector employers in the United States, we find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.
Related:
Meer and West on Minimum Wage
Source: John Schmitt, Center for Economic and Policy Research (CEPR), September 27, 2013

…The new paper will, I am sure, be cited by opponents of current proposals to increase the federal and various state minimum wages. But, there are important reasons to be skeptical about the findings. …
Two Red Flags
The first red flag is that the negative effect of the minimum wage estimated by Meer and West applies to the entire workforce (not just workers affected by the minimum wage) and appears to lie well outside the range of almost all earlier research on the minimum wage. …