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Living wages: Protection for or protection from low-wage workers?

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Author Info
David Neumark

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Abstract

Living wage laws are touted as anti-poverty measures. Yet they apply to only a small fraction of workers, most commonly covering only employers with city contracts. The apparent contradiction between broad anti-poverty goals and narrow coverage suggests that goals other than poverty reduction may partly underlie living wage campaigns. This paper considers the hypothesis that living wage laws act to maintain or increase rents among unionized municipal workers. By raising the wages that city contractors would have to pay, living wage laws may reduce the incentives for cities to contract out work that would otherwise be done by unionized municipal employees, hence increasing the bargaining power of municipal unions and leading to higher wages for their members. The evidence presented here, from an analysis of CPS data for 1996-2000, indicates that the wages of unionized municipal workers are indeed increased as a result of living wages covering contractors. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Publisher Info
Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 58 (2004)
Issue (Month): 1 (October)
Pages: 27-51
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Handle: RePEc:ilr:articl:v:58:y:2004:i:1:p:27-51

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David Neumark & Scott Adams, 2000. "Do Living Wage Ordinances Reduce Urban Poverty?," NBER Working Papers 7606, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Arunava Bhattacharyya & Elliott Parker & Kambiz Raffiee, 1994. "An Examination of the Effect of Ownership on the Relative Efficiency of Public and Private Water Utilities," Land Economics, University of Wisconsin Press, vol. 70(2), pages 197-209. [Downloadable!] (restricted)
  3. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S87-104, August. [Downloadable!] (restricted)
  4. Daniel P. Kessler & Lawrence Katz, 1999. "Prevailing Wage Laws and Construction Labor Markets," NBER Working Papers 7454, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Leibenstein, Harvey, 1978. "On the Basic Proposition of X-Efficiency Theory," American Economic Review, American Economic Association, vol. 68(2), pages 328-32, May. [Downloadable!] (restricted)
  6. Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, vol. 68(2), pages 246-50, May. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Timothy J. Bartik, 2002. "Thinking about Local Living Wage Requirements," Staff Working Papers 02-76, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  2. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2002. "Labor Market Institutions and Demographic Employment Patterns," NBER Working Papers 9043, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. John T. Addison, 2006. "Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals’ Costs (Even Lowering One’s Own?), and Interjurisdictional Competition," IZA Discussion Papers 2381, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Murgai, Rinku & Ravallion, Martin, 2005. "Is a guaranteed living wage a good anti-poverty policy?," Policy Research Working Paper Series 3640, The World Bank. [Downloadable!]
  5. Scott Adams & David Neumark, 2004. "The Economic Effects of Living Wage Laws: A Provisional Review," NBER Working Papers 10562, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Scott Adams & David Neumark, 2003. "Living Wage Effects: New and Improved Evidence," NBER Working Papers 9702, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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