What’s Across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects

By Priyaranjan Jha, David Neumark, and Antonio Rodriguez-Lopez.

"Abstract 

Dube, Lester, and Reich (2010) argue that state-level minimum wage variation correlated with economic shocks generates spurious evidence that higher minimum wages reduce employment. Using minimum wage variation within contiguous county pairs that share a state border, they find no relationship between minimum wages and employment in the U.S. restaurant industry. We show that this result is overturned if we use instead multi-state commuting zones, which provide superior definitions of local economic areas. Using the same within-local area research design—but within cross-border commuting zones—we find a robust negative relationship between minimum wages and employment."