The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis

54 Pages Posted: 31 Oct 2007

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 Schweitzer

Federal Reserve Banks - Federal Reserve Bank of Cleveland

William Wascher

Board of Governors of the Federal Reserve System

Date Written: December 2004

Abstract

The primary goal of a national minimum wage floor is to raise the incomes of poor families with members in the work force. We present evidence on the effects of minimum wages on family incomes from March CPS surveys. Using non-parametric estimates of the distributions of family income relative to needs in states and years with and 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 their net effect is, if anything, to increase the proportions of families with incomes below or near the poverty line. Thus, it would appear that reductions in the proportions of families that are poor or near-poor should not be counted among the potential benefits of minimum wages.

Keywords: minimum wages, poverty, nonparametric, family incomes

JEL Classification: J18, I3, J23, D31

Suggested Citation

Neumark, David and Schweitzer, Mark and Wascher, William, The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis (December 2004). FRB of Cleveland Working Paper No. 04-12, Available at SSRN: https://ssrn.com/abstract=1025594 or http://dx.doi.org/10.2139/ssrn.1025594

David Neumark

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 Schweitzer (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

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William Wascher

Board of Governors of the Federal Reserve System ( email )

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