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Do Living Wage Ordinances Reduce Urban Poverty?

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Author Info
David Neumark
Scott Adams

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Abstract

Many cities in the United States have recently passed living wage ordinances. These ordinances typically mandate that businesses under contract with the city or, in some cases, receiving assistance from the city, must pay their workers a wage sufficient to support a family financially. To date, there has been no empirical analysis of the actual effects of living wages on the expected beneficiaries low-wage workers and their families. In this paper, we estimate the effects of city living wage ordinances on the wages and hours of workers in cities that have adopted such legislation. We also look at the effects of the ordinances on employment and poverty rates in these cities. Our findings indicate that living wage ordinances boost wages of low-wage workers. The estimated elasticities are small, however, which seems consistent with the fact that living wages have limited coverage, and may also have limited compliance and enforcement. In addition to the wage effects, we find weak negative hours effects of living wage ordinances on low-wage workers, and strong negative employment effects. Finally, our estimates of the effects of living wages on poverty rates indicate that living wage ordinances may help to achieve modest reductions in urban poverty.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7606.

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Date of creation: Mar 2000
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Handle: RePEc:nbr:nberwo:7606

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J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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  1. David Neumark, 2001. "Living Wages: Protection For or Protection From Low-Wage Workers?," NBER Working Papers 8393, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Scott Adams & David Neumark, 2004. "When Do Living Wages Bite?," NBER Working Papers 10561, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Mark D Brenner, 2004. "The Economic Impact of Living Wage Ordinances," Working Papers wp80, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
  4. Scott Adams & David Neumark, 2005. "The Effects of Living Wage Laws: Evidence from Failed and Derailed Living Wage Campaigns," NBER Working Papers 11342, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. David Neumark & Daiji Kawaguchi, 2001. "Attrition Bias in Economic Relationships Estimated with Matched CPS Files," NBER Working Papers 8663, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. 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)
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  7. Daniel Fairchild, 2004. "Does the minimum wage help the poor?," Forum for Social Economics, Springer, vol. 34(1), pages 31-42, September. [Downloadable!] (restricted)
  8. 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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