FULL WAGES, PART-TIME EMPLOYMENT AND THE MINIMUM-WAGE

The economic effects of the minimum wage have become increasingly ambi guous. Historically, economists have asserted that increases in the mi nimum wage result in increases in unemployment. This relationship has been challenged recently by Card and Krueger, Katz and Krueger, and Ca rd. These authors have provided empirical evidence that seems to indic ate that there is no relationship between various economic variables ( such as level of employment, and product price, among others) and the minimum wage. In addition, these authors have not provided a cogent pr esentation of the effects of the minimum wage on part-time employment. This study examines, from a theoretical standpoint, the effects of th e minimum wage on employment. Furthermore, we emphasize the distinctio n between money wages and full wages; and the role that part-time empl oyment plays in the analysis. After incorporating these factors into a theoretical presentation, we provide empirical evidence by way of an OLS regression. We conclude that firms respond to increases in the min imum wage by altering the level of part-time employment. By doing this , firms are able to absorb the minimum wage increase because part time rs receive fewer fringe benefits.