Why Minimum Wage Hikes May Not Reduce Employment

may accept findings that minimum wage increases do not adversely affect employment, but economists question them. Critics have charged that the studies use poor data or incorrect methodologies. Some economists also argue that no convincing theoretical model predicts that minimum wage increases do not reduce employment. Many of these economists believe that low-wage labor markets are instead characterized by a competitive model that predicts that an increase in the wage floor should always reduce employment. This article describes and evaluates several alternative models that may explain the controversial recent findings and proposes avenues for future research that would help determine the validity of these models. Why Minimum Wage Hikes May Not Reduce Employment