Tips allow restaurants to pay sewers lower wages. As more sewers are hired, each serves fewer meals and earns less in tips. As a result, restaurants must pay a higher wage. This gives them monopsony power over wages. Over some range, a higher minimum wage should increase employment. Empirically, we found the full ''reverse C'' monopsony pattern of employment for restaurants, with employment first going up and then down as the minimum wage is increased.
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San Diego State Univ, San Diego, CA 92182 USA
Univ New Hampshire, Durham, NH 03824 USA
ESSPRI, Durham, NH 03824 USA
IZA, San Diego, CA 92109 USASan Diego State Univ, San Diego, CA 92182 USA
Sabia, Joseph J.
Burkhauser, Richard V.
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Univ Texas Austin, Austin, TX 78712 USA
Univ Melbourne, Melbourne, Vic, AustraliaSan Diego State Univ, San Diego, CA 92182 USA
Burkhauser, Richard V.
Mackay, Taylor
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Univ Calif Irvine, Irvine, CA USASan Diego State Univ, San Diego, CA 92182 USA