Does Raising the Minimum Wage Help the Poor?

14 Pages Posted: 5 Jan 2008

See all articles by Andrew Leigh

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

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Abstract

What is the impact of raising the minimum wage on family incomes? Using data from the 1994/1995 to 2002/2003 Survey of Income and Housing, the characteristics of low-wage workers are analyzed. Those who earn near-minimum wages are disproportionately female, unmarried and young, without post school qualifications and overseas born. About one-third of near-minimum-wage workers are the sole worker in their household. Due to low labor force participation rates in the poorest households, minimum-wage workers are most likely to be in middle-income households. Under plausible parameters for the effect of minimum wages on hourly wages and employment, it appears unlikely that raising the minimum wage will significantly lower family income inequality.

Suggested Citation

Leigh, Andrew, Does Raising the Minimum Wage Help the Poor?. Economic Record, Vol. 83, Issue 263, pp. 432-445, December 2007, Available at SSRN: https://ssrn.com/abstract=1080372 or http://dx.doi.org/10.1111/j.1475-4932.2007.00432.x

Andrew Leigh (Contact Author)

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

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