Evaluating Living Wage Laws in the United States: Good Intentions and Economic Reality in Conflict?
University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics
PERI Working Paper No. 61
This paper first examines the question "what is a living wage" and provides a range of specific dollar amounts derived from a conceptual assessment of the term. I then provide a series of cost estimates of living wage laws in various cities. Based on these cost estimates, I examine a set of alternative adjustments that covered firms could make to absorb these costs, including raising prices and productivity, redistributing the firm's income more equally, laying off employees and relocating out of the area covered by the law. I draw upon both prospective and retrospective evidence to reach an overall assessment of the benefits of living wage laws relative to their costs.
Number of Pages in PDF File: 43
Keywords: living wage, labor markets, unintended consequences
JEL Classification: J38working papers series
Date posted: October 9, 2003
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