While an extensive literature exists on the effects of federal and state minimum wages, the minimum wage received by tipped workers has received less attention. Researchers have found it difficult to capture the hourly wages of tipped workers and thus assess the economic effects of the tipped minimum wage. In this paper, I present a new measure of hourly wages for tipped servers (wait staff and bartenders) using linkedW-2 and survey data. I estimate the effect of tipped minimum wages on the wages and hourly tips of servers, as well as server employment and hours worked. I find that higher mandatory tipped minimum wages increase that portion of wages paid by employers, but decrease tip income by a similar percentage. I also find evidence that employment increases over lower values of the tipped minimum wage and then decreases at higher values. These results are consistent with a monopsony model of server employment. The wide variance of tipped minimum wages compared to non-tipped minimums provide insight into monopsony effects that may not be discernible over a smaller range of minimum wage values.
Others in Series
Revisiting the Effects of Unemployment Insurance Extensions
Uses county border pair identification to explore individual labor supply response to UI benefit extension.
The Effect of Low-Income Housing on Neighborhood Mobility
Examines the effects of subsidized housing construction on neighborhood characteristics using nationally representative microdata.
How State Policies Changed Advanced Tax Refund Payments
Examines the impact of state-level regulation of Refund Anticipation Loans on the increase in the use of Refund Anticipation Checks and on taxpayer outcomes.