Graduation Year

2017

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Public Policy Analysis

Second Department

Economics

Reader 1

Fernando A. Lozano

Reader 2

Nancy Neiman-Auerbach

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2017 Philippa K Haven

Abstract

Much debate surrounds the effect the minimum wage has on employment. Economic theory suggests that the minimum wage acts as a price floor in the labor market and thus leads to disemployment. However, empirical evidence from a variety of industries, states, and age groups suggests that the minimum wage has negative, negligible, and even positive effect on employment. This Economics/Public Policy Analysis thesis is the first study to analyze the effect the minimum wage has on employment in the informal sector. I apply four OLS regressions with various levels of specifications on five dependent variables: hourly wage, log hourly wages, hours worked, log daily income, and percentage working. My results suggest that economic theory holds true in the informal sector with regards to the California minimum wage mandate of 2016: the minimum wage had a positive and statistically significant effect on hourly wage, with average hourly wages increasing by $1.88; the minimum wage had a negative and statistically significant effect on percentage working, with average number of workers dispatched to jobs decreasing by 15%.

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