Living Wage Laws: How Much Do (Can) They Matter?

40 Pages Posted: 3 Nov 2008

See all articles by Harry J. Holzer

Harry J. Holzer

Georgetown University - Public Policy Institute (GPPI); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

In this paper I review what we have learned about living wage laws and their impacts on the wages, employment and poverty rates of low-wage workers. I review the characteristics of these laws and where they have been implemented to date, and what economic theory tells us about their likely effects in more and less competitive labor markets. I then review two bodies of empirical evidence: 1) Studies across cities or metropolitan areas that have and have not implemented these laws, using data from the Current Population Survey pooled over many years; and 2) Studies within particular cities, based on comparisons of covered and uncovered workers before and after the laws are passed. I conclude that living wage laws have modestly raised wage levels of low wage workers and have reduced their employment at covered firms, but that the magnitudes of both effects are likely quite small, given how few workers are usually covered by these ordinances.

Keywords: living wages

JEL Classification: J38, J88

Suggested Citation

Holzer, Harry J., Living Wage Laws: How Much Do (Can) They Matter?. IZA Discussion Paper No. 3781. Available at SSRN: https://ssrn.com/abstract=1293553 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Harry J. Holzer (Contact Author)

Georgetown University - Public Policy Institute (GPPI) ( email )

3600 N Street, NW Suite 200
Washington, DC 20057
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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