Empirical estimates of the short-run employment effects of minimum wage increases
A) have produced a consensus that teen employment will fall by almost 10% for every 10% increase in the minimum wage.
B) are very low, partly because it takes a long time for employers to adjust fully to changes in the minimum wage.
C) are very high, partly because it takes a long time for employers to adjust fully to changes in the minimum wage.
D) have produced a consensus that teen employment will not fall at all when the minimum wage is increased by 10%.

Question

Quizplus · Accepted Answer

Empirical estimates suggest that the short-run employment effects of minimum wage increases are very low, with a small decrease in employment for every increase in the minimum wage. This is because employers may take time to adjust to the new minimum wage, and may instead rely on other cost-cutting measures, such as reducing hours or benefits, before resorting to laying off workers. The extent of the employment effects also varies by demographic, with teen employment being more sensitive to minimum wage increases than adult employment.

Empirical Estimates of the Short-Run Employment Effects of Minimum Wage