T. William Lester

Minimum Wage Shocks, Employment Flows, and Labor Market Frictions

We provide the first estimates of the effects of minimum wages on employment flows in the US labor market, identifying the impact by using policy discontinuities at state borders. We find that minimum wages have a sizable negative effect on employment flows but not on stocks. Separations and accessions fall among affected workers, especially those with low tenure. We do not find changes in the duration of nonemployment for separations or hires. This evidence is consistent with search models with endogenous separations.

Innovation in the Green Economy: An Extension of the Regional Innovation System Model?:

Policy makers increasingly look to green innovation as a source of job creation. Using the case of California, we argue that green innovation complicates traditional models of innovation and its role in economic development. This study uses secondary source data and a survey of 650 green and traditional businesses to define the green economy, identify innovation of products and services, and link innovation to sectoral and regional growth. The authors find that the type of innovation and its role varies widely by sector. The most environmentally challenged firms are among the most likely to innovate new processes, whereas new green innovative companies are more likely to respond to local and regional markets. Innovation does not necessarily foster growth. It is a boost to traditional firms, but emerging green firms may need additional tools and the support of local networks to transform new ideas and products to new markets.

WHY REGIONS? WHY NOW? WHO CARES?

ABSTRACT: This article examines the emergence of the region as a platform for achieving economic competitiveness and social equity. We use a combination of empirical exercises to examine the timing and degree of actor interest, including convergence regressions and coefficients of variation analysis to see if regional economic and social performance is more heterogeneous, and logistical analysis to determine what metropolitan-level factors can explain the rise of regionalist interest by business organizations and/or social justice organizations. We find that performance is, in fact, generally more heterogeneous, that different actors are motivated by different factors, and that interest by business groups seems to trigger a “reactive regionalism” by equity proponents (but not the other way around).

Firm Entry and Wages: Impact of Wal-Mart Growth on Earnings Throughout the Retail Sector

This paper estimates the effect of Wal-Mart expansion on wages, benefits, and skill-composition of retail workers during the 1990s. We exploit the spatial pattern of Wal-Mart diffusion, radiating outward from the original store in Benton county, Arkansas, to control for potential endogeneity in store openings using both instrumental variable and control function approaches. Estimates from state and county level data suggest that store openings reduced both the average earnings and health benefits of retail workers. At the county level, a new Wal-Mart is found to reduce retail earnings, on average, by .5 to .9 percent. Moreover, we find that changes in skill-composition explain only a small part of compensation reduction, indicating that the decline in retail wages reflect a reduction in labor market rents.

The Impact of Living Wage Laws on Urban Economic Development Patterns and the Local Business Climate: Evidence from California Cities

Traditional local economic development policies entice private businesses to create high-paying jobs in a given jurisdiction through direct subsidies or by projecting a positive “business climate” within regional and global arenas. Since 1994 however, living wage ordinances have emerged as an alternative response to labor market polarization in urban areas. However, these laws raise labor costs for employers and may thus reduce economic growth. This article advances the empirical literature on living wage impacts through the use of a novel data set—the National Establishment Time Series—to track employment and establishment growth at the city level among directly affected employers (e.g., government contractors), as well as other establishments that may be indirectly signaled by a change in the local political environment. Using panel regression models that account for structural differences between living wage and non—living wage cities, this article finds that living wage laws have no significant impact on employment or establishment growth. Additionally, this article finds no evidence that living wage laws “signal” businesses about a potentially harmful change in the local business climate.