Campus Only Senior Thesis
Bachelor of Arts
Public Policy Analysis
Fernando A. Lozano
© 2017 Philippa K Haven
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%.
Haven, Philippa, "Minimum Wage & the Informal Sector: Evidence from a Day Labor Center" (2017). Scripps Senior Theses. 1018.
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