A comprehensive review of evidence on the effect of minimum wages on employment, skills, wage and income distributions, and longer-term labor market outcomes concludes that the minimum wage is not a good policy tool.

Minimum Wages and Employment focuses on the "new minimum wage research." This is the first comprehensive review of the literature in the past fifteen years. It includes the initial round of the new minimum wage research on the employment effects of the minimum wage, major conceptual and empirical issues that arose out of that research, recent increases in minimum wage laws, and the empirical research on the employment effects of the minimum wage in other countries. Minimum Wages and Employment provides an assessment of alternative models of the labor market. It offers general conclusions about the effects of the minimum wage on employment that are relevant to policymakers, pointing out in what context and for which workers the minimum wage will have consequences. Finally, by presenting a comprehensive review of the more recent minimum wage literature, the authors explain the range of results in the literature, identify sources of differences in these results, and determine what conclusions can be drawn from the literature.

We construct a panel data set on state-level minimum wage laws and economic conditions to reevaluate existing evidence on minimum wage effects on employment, most of which comes from time-series data. Our estimates of the elasticities of teen and young-adult employment-to-population ratios fall primarily in the range -0.1 to -0.2, similar to the consensus range of estimates from time-series studies. We also find evidence that youth subminimum wage provisions enacted by state legislatures have moderated the disemployment effects of minimum wages.

In Neumark and Wascher (1992), we present findings supporting the earlier consensus that minimum wages reduce employment for teens and young adults, with elasticities in the range -0.1 to -0.2. In addition, we find that subminimum wages moderate these disemployment effects. Card, Katz and Krueger (1993) criticize numerous aspects of our analysis, and contest our conclusions. This reply presents an assessment of their arguments, as well as additional evidence related to some of the criticisms that they raise. We conclude that the issues raised by Card, et al., upon further examination, do not alter the conclusions from our original paper, and in some cases even reinforce those conclusions.