Volume 18, Number 3 (Summer) 1983
Grossman, Jean Baldwin. 1983. "The Impact of the Minimum Wage on Other Wages." Journal of Human Resources 18(3):359-378.
In this paper I explore how changes in the minimum wage affect various occupational wages. I postulate that other wages increase for two reasons: first, firms try to mitigate the deterioration in a worker's relative wage which would cause him to reduce his work effort, and second, there is an increase in the demand for nonminimum wage workers. Wage adjustment patterns are examined to ascertain whether wage comparisons playa role in the adjustment process. The empirical work shows a short-run wage compression among white-collar occupations which is consistent with the wage comparison model. However, large standard errors make inferences weak.
The author is an economist with Mathematica Policy Research, Inc.
The author would like to thank Henry Farber and Gene Grossman for their valuable
inputs into this paper and their periodic pep talks. Walter Corson, William
Dickens, Daniel Hamermesh, Jerry Hausman, Barbara Kehrer, Alix Worth. and
anonymous referees also provided useful comments and suggestions. Marjorie
Mitchell had the patience to type and retype this paper.
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