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Who Benefits from a Minimum Wage Increase?

Author

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  • John W. Lopresti
  • Kevin J. Mumford

Abstract

The authors address the question of how a minimum wage increase affects the wages of low-wage workers relative to the wage the worker would have if there had been no minimum wage increase. The authors’ method allows for the effect to depend not only on the initial wage of the worker but also nonlinearly on the size of the minimum wage increase. Results indicate that low-wage workers who experience a small increase in the minimum wage tend to have lower wage growth than if there had been no minimum wage increase. A large increase to the minimum wage not only increases the wages of those workers who previously earned less than the new minimum wage but also spills over to workers with moderately higher wages. Finally, the authors find little evidence of heterogeneity in the effect by age, gender, income, and race.

Suggested Citation

  • John W. Lopresti & Kevin J. Mumford, 2016. "Who Benefits from a Minimum Wage Increase?," ILR Review, Cornell University, ILR School, vol. 69(5), pages 1171-1190, October.
    • Handle: RePEc:sae:ilrrev:v:69:y:2016:i:5:p:1171-1190
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    References listed on IDEAS

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    Cited by:

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    2. Malte Luebker, 2019. "Can the Structure of Inequality Explain Fiscal Redistribution? Revisiting the Social Affinity Hypothesis," LIS Working papers 762, LIS Cross-National Data Center in Luxembourg.
    3. Louis-Philippe Beland & Bulent Unel, 2018. "The impact of party affiliation of US governors on immigrants’ labor market outcomes," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(2), pages 627-670, April.
    4. Masanori Kuroki, 2018. "Subjective well‐being and minimum wages: Evidence from U.S. states," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 171-180, February.
    5. Filiz Gülal & Adam Ayaita, 2020. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-experiment in Germany," Journal of Happiness Studies, Springer, vol. 21(7), pages 2669-2692, October.
    6. Evan Totty, 2017. "The Effect Of Minimum Wages On Employment: A Factor Model Approach," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1712-1737, October.
    7. Hampton, Matt & Totty, Evan, 2023. "Minimum wages, retirement timing, and labor supply," Journal of Public Economics, Elsevier, vol. 224(C).
    8. Fahad Fahimullah & Yi Geng & Bradley Hardy & Daniel Muhammad & Jeffrey Wilkins, 2019. "Earnings, EITC, and Employment Responses to a $15 Minimum Wage: Will Low-Income Workers Be Better Off?," Economic Development Quarterly, , vol. 33(4), pages 331-350, November.
    9. Carmen Lozano & Cesaire Chiatchoua, 2022. "Conditions Influencing Salary of the Automotive Industry in Mexico City—A Linguistic Fuzzy-Set Approach," Sustainability, MDPI, vol. 14(11), pages 1-22, May.
    10. Åslund, Olof & Forslund, Anders & Liljeberg, Linus, 2017. "Labour market entry of non-Labour migrants – Swedish evidence," Working Paper Series 2017:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    11. SATO Kazuma, 2021. "The Impact of the Minimum Wage Increase on Subjective Wellbeing: Evidence from Japan," Discussion papers 21075, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    wage effects; minimum wage;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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