Minimum wage laws: What does an employment increase imply about output and welfare?

SelectedWorks Author Profiles:

Thomas J. Carter

Document Type


Publication Date





Card and Krueger find empirically that minimum wage laws may increase employment. The current paper seeks the analytical implications of employment-increasing minimum wages for output and welfare. The standard supply and demand model cannot be used for this purpose. One needs a model in which employment-increasing minimum wages are at least possible, such as this paper's efficiency wage model. Here, an employment increase is neither necessary nor sufficient for expected welfare gains for either employed or unemployed workers. An employment-increasing minimum wage raises output but unambiguously lowers labor force participation and hurts those who remain unemployed.


Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.



Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.