A Study on Regional Disparities in the Employment Effects of Minimum Wage Increases

Abstract

This study examines the heterogeneous employment effects of minimum wage increases across different regions, focusing on disparities driven by local economic conditions. Against the backdrop of ongoing debates about the employment impacts of minimum wage policies, this research addresses the critical gap in understanding how regional factors—such as cost of living, industrial composition, and labor market tightness—moderate these effects. Using a difference-in-differences methodology applied to longitudinal employment data from diverse regions over a decade, the analysis reveals that minimum wage hikes have negligible employment consequences in high-cost urban areas but lead to modest employment reductions in low-income rural regions. These findings underscore the importance of tailoring minimum wage policies to regional economic contexts to mitigate adverse outcomes. The study contributes to policy discussions by advocating for geographically differentiated approaches to minimum wage implementation.