Do minimum wage hikes reduce employment? State-level evidence from the low-wage retail sector

Several recent studies have challenged the conventional notion that raising the minimum wage reduces employment. This study considers this issue by ex amining the minimum wage's influence on retail employment. Standard labor m arket analysis suggests that low-wage industries should be particularly sen sitive to minimum wage hikes. Therefore, by considering retail employment u sing pooled-cross sectional, state-level data, this study extends recent re search that generally emphasized teen employment. The empirical analysis co nsiders state data from the fatter 1980s, a unique period where many states raised their minimum wage above the federal level. Our results suggest tha t an increased minimum wage reduces retail employment, which is consistent with the standard labor market model. Moreover, further analysis indicates that minimum wage hikes also had relatively large adverse effects on total state employment growth, which implies that state minimum-wage policies can affect firm and household location.