The effects of minimum wages over the business cycle: the Great Recession

Abstract

Purpose

This paper examines disemployment effects of minimum wages during the period 2002–2010.

Design/methodology/approach

The authors employ the discontinuity design.

Findings

The authors find that minimum wages had a significant negative impact on teen employment before the Great Recession. During the Great Recession, the disemployment effects of minimum wages were insignificant. The finding is consistent with the evolution of firms’ market power during the business cycle.

Originality/value

The authors attempt to reconcile the debate about the effects of minimum wages on US employment.

Citation

Hean, O. and Deng, N. (2023), "The effects of minimum wages over the business cycle: the Great Recession", International Journal of Manpower, Vol. 44 No. 1, pp. 19-36. https://doi.org/10.1108/IJM-07-2021-0402