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Redistribution through Minimum Wage Regulation: An Analysis of Program Linkages and Budgetary Spillovers

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  • Jeffrey Clemens

Abstract

Program linkages and budgetary spillovers can significantly complicate efforts to project a policy change's effects. I illustrate this point in the context of recent increases in the federal minimum wage. Previous analysis finds that these particular minimum wage increases had significant effects on employment. Employment declines were sufficiently large that the average earnings of targeted individuals declined. Payroll tax revenues, thus, also fell. I find that transfers to affected individuals through programs including unemployment insurance, food stamp benefits, and cash welfare assistance changed little. These programs, thus, offset relatively little of the earnings declines experienced by individuals who lost employment. I discuss how this broad range of spillovers matters for assessing the relevant minimum wage change's welfare implications.

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  • Jeffrey Clemens, 2016. "Redistribution through Minimum Wage Regulation: An Analysis of Program Linkages and Budgetary Spillovers," Tax Policy and the Economy, University of Chicago Press, vol. 30(1), pages 163-189.
    • Handle: RePEc:ucp:tpolec:doi:10.1086/685596
    DOI: 10.1086/685596
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    Cited by:

    1. Clemens, Jeffrey, 2017. "Pitfalls in the Development of Falsification Tests: An Illustration from the Recent Minimum Wage Literature," MPRA Paper 80154, University Library of Munich, Germany.
    2. Clemens, Jeffrey, 2017. "The Minimum Wage and the Great Recession: A Response to Zipperer and Recapitulation of the Evidence," MPRA Paper 80153, University Library of Munich, Germany.
    3. Meer, Jonathan, 2018. "Recent Research on the Minimum Wage: Implications for Missouri," MPRA Paper 93926, University Library of Munich, Germany.
    4. Jeehoon Han, 2020. "Snap Expansions And Participation In Government Safety Net Programs," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1929-1948, October.

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