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Living Wage Laws: How Much Do (Can) They Matter?

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  • Holzer, Harry J.

    ()
    (Georgetown University)

Abstract

In this paper I review what we have learned about living wage laws and their impacts on the wages, employment and poverty rates of low-wage workers. I review the characteristics of these laws and where they have been implemented to date, and what economic theory tells us about their likely effects in more and less competitive labor markets. I then review two bodies of empirical evidence: 1) Studies across cities or metropolitan areas that have and have not implemented these laws, using data from the Current Population Survey pooled over many years; and 2) Studies within particular cities, based on comparisons of covered and uncovered workers before and after the laws are passed. I conclude that living wage laws have modestly raised wage levels of low wage workers and have reduced their employment at covered firms, but that the magnitudes of both effects are likely quite small, given how few workers are usually covered by these ordinances.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3781.

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Length: 40 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3781

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Keywords: living wages;

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  1. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc.
  2. Robert Pollin & Jeannette Wicks-Lim & Mark D. Brenner, 2002. "Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark's How Living Wage Laws Affect Low-Wage Workers and Low-Income Families," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp43, Political Economy Research Institute, University of Massachusetts at Amherst.
  3. Scott Adams & David Neumark, 2005. "Living Wage Effects: New and Improved Evidence," Economic Development Quarterly, , , vol. 19(1), pages 80-102, February.
  4. Johnson, Harry G & Mieszkowski, Peter, 1970. "The Effects of Unionization on the Distribution of Income: A General Equilibrium Approach," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(4), pages 539-61, November.
  5. Scott Adams & David Neumark, 2004. "The Economic Effects of Living Wage Laws: A Provisional Review," PPIC Working Papers, Public Policy Institute of California 2004.10, Public Policy Institute of California.
  6. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 84(4), pages S87-104, August.
  7. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262141027, December.
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