The Effects of Minimum Wages on the Distribution of Family Incomes: A Non-Parametric Analysis

46 Pages Posted: 22 Jun 2000

See all articles by David Neumark

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Mark E. Schweitzer

Federal Reserve Bank of Cleveland

William Wascher

Board of Governors of the Federal Reserve System - Division of Research and Statistics

Date Written: April 1998

Abstract

The primary goal of a national minimum wage floor is to raise the incomes of poor or near-poor families with members in the work force. However, estimates of employment effects of minimum wages tell us relatively little about whether minimum wages are likely to achieve this goal; even if the disemployment effects of minimum wages are modest, minimum wage increases could result in net income losses for poor and low-income families. In this paper, we present evidence on the effects of minimum wages on family incomes from matched March CPS surveys. Using non-parametric estimates of the distributions of family income relative to needs in states and years with an without minimum wage increases, we examine the effects of minimum wages on this distribution, and on the distribution of the changes in income that families experience. Although minimum wages do increase the incomes of some poor families, the evidence indicates that the overall effects are to increase the proportion of families that are poor and near-poor, and to decrease the proportion of families with incomes between 1.5 and 3 times the poverty level.

Suggested Citation

Neumark, David and Schweitzer, Mark E. and Wascher, William, The Effects of Minimum Wages on the Distribution of Family Incomes: A Non-Parametric Analysis (April 1998). NBER Working Paper No. w6536. Available at SSRN: https://ssrn.com/abstract=226271

David Neumark (Contact Author)

University of California, Irvine - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Mark E. Schweitzer

Federal Reserve Bank of Cleveland ( email )

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William Wascher

Board of Governors of the Federal Reserve System - Division of Research and Statistics ( email )

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United States
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202-452-3819 (Fax)

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