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Tipped Wage Effects on Earnings and Employment in Full‐Service Restaurants
Author(s) -
Allegretto Sylvia,
Nadler Carl
Publication year - 2015
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/irel.12108
Subject(s) - earnings , straddle , wage , labour economics , economics , service (business) , panel data , demographic economics , econometrics , economy , finance , accounting
We exploit more than 20 years of changes in state‐level tipped wage policy and estimate earnings and employment effects of the tipped wage using county‐level panel data on full‐service restaurants ( FSR ). We extend earlier work by Dube, Lester, and Reich ([Dube, Arindrajit, 2010]) and compare outcomes between contiguous counties that straddle a state border. We find a 10‐percent increase in the tipped wage increases earnings in FSR s about 0.4 percent. Employment elasticities are sensitive to the inclusion of controls for unobserved spatial heterogeneity. In our preferred models, we find small, insignificant effects of the tipped wage on FSR employment.