The Effects of Minimum Wages Throughout the Wage Distribution

39 Pages Posted: 8 May 2000 Last revised: 15 Oct 2010

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: February 2000

Abstract

This paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage, including wages, hours, employment, and ultimately labor income, representing the central margins of adjustment that impact the economic well-being of workers potentially affected by minimum wage increases. The evidence indicates that workers initially earning near the minimum wage are adversely affected by minimum wage increases, while, not surprisingly, higher-wage workers are little affected. Although wages of low-wage workers increase , their hours and employment decline, and the combined effect of these changes is a decline in earned income. We also delve into the political economy of minimum wages, attempting to understand the vigorous support of labor unions for minimum wage increases. Using the same empirical framework, we find that relatively low-wage union members gain at the expense of the lowest-wage nonunion workers when minimum wages increase.

Suggested Citation

Neumark, David and Schweitzer, Mark and Wascher, William, The Effects of Minimum Wages Throughout the Wage Distribution (February 2000). NBER Working Paper No. w7519, Available at SSRN: https://ssrn.com/abstract=216488

David Neumark (Contact Author)

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

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-824-8496 (Phone)
949-824-2182 (Fax)

HOME PAGE: http://www.socsci.uci.edu/~dneumark/

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

Mark Schweitzer

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

East 6th & Superior
Cleveland, OH 44101-1387
United States

William Wascher

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2812 (Phone)
202-452-3819 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
138
Abstract Views
2,220
rank
253,509
PlumX Metrics