<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Revisiting research from the 1990s from Castillo-Freeman and Krueger, I use the synthetic control method of Abadie et al. to estimate the impact of the most recent increase in the federal minimum wage on employment in Puerto Rico. I estimate that the employment/population ratio of various groups in Puerto Rico was significantly lower than that of a data-constructed synthetic Puerto Rico which did not raise its minimum wage. Placebo tests on other donor units, time periods, and population groups suggest that a significant portion of this gap is a result of the minimum wage. Groups with greater exposure to the minimum wage, such as teens and restaurant workers, experienced proportionally greater declines in employment. My results suggest an own-wage elasticity of employment in Puerto Rico of −0.68, higher than estimates from the mainland, which suggests that the employment response to minimum wages may be more dramatic at higher relative minimum wages.</p></abstract>

Revisiting research from the 1990s from Castillo-Freeman and Krueger, I use the synthetic control method of Abadie et al. to estimate the impact of the most recent increase in the federal minimum wage on employment in Puerto Rico. I estimate that the employment/population ratio of various groups in Puerto Rico was significantly lower than that of a data-constructed synthetic Puerto Rico which did not raise its minimum wage. Placebo tests on other donor units, time periods, and population groups suggest that a significant portion of this gap is a result of the minimum wage. Groups with greater exposure to the minimum wage, such as teens and restaurant workers, experienced proportionally greater declines in employment. My results suggest an own-wage elasticity of employment in Puerto Rico of −0.68, higher than estimates from the mainland, which suggests that the employment response to minimum wages may be more dramatic at higher relative minimum wages.

Puerto Rico's minimum wage: Revisiting a price floor with bite

IZA Journal of Labor Policy

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Puerto Rico's minimum wage: Revisiting a price floor with bite"}

Revisiting research from the 1990s from Castillo-Freeman and Krueger, I use the synthetic control method of Abadie et al. to estimate the impact of the most...

Puerto Rico's minimum wage: Revisiting a price floor with bite

Published Online: Nov 25, 2021

Page range: -

Accepted: Oct 18, 2021

DOI: https://doi.org/10.2478/izajolp-2021-0009

Keywords
Minimum Wage, Puerto Rico, Synthetic Controls

© 2021 Robert Tucker Omberg, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Puerto Rico's minimum wage: Revisiting a price floor with bite

Published Online: Nov 25, 2021

Page range: -

Accepted: Oct 18, 2021

DOI: https://doi.org/10.2478/izajolp-2021-0009

KeywordsMinimum Wage, Puerto Rico, Synthetic Controls

© 2021 Robert Tucker Omberg, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
Minimum Wage, Puerto Rico, Synthetic Controls