Employment Effects of Minimum Wages: Evidence from a Quasi-Experiment

To estimate the impact of raising the minimum wage on employment, this article uses a natural experiment, arising from six increases in the Western Australian statutory minimum wage during the period 1994-2001. Relative to the rest of Australia, the employment to population ratio in Western Australia fell following each of the six rises, twice by a statistically significant margin. Aggregating the increases, the elasticity of labour demand with respect to the Western Australian statutory minimum wage is found to be - 0.13. Copyright 2003 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

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