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Abstract

In a 2003 study, we simulated the effects of a minimum wage increase in Illinois using payroll and population data, and predicted that the increase would not trigger widespread job loss. Data are now available to examine these effects empirically. Controlling for the demographics and economic changes of bordering states, as well as using Illinois before the minimum wage change as a control, we arrive at unexpected results given our prior simulations. Taken at face value, our estimates imply that the price elasticity of demand for low-wage workers in Illinois is high; in fact, much larger than current evidence suggests.

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