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Do Living Wage Ordinances Reduce Urban Poverty?

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  • David Neumark
  • Scott Adams

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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Bibliographic Info

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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Publication status: published as Neumark, David and Scott Adams. "Do Living Wage Ordinances Reduce Urban Poverty?," Journal of Human Resources, 2003, v38(3,Summer), 490-521.
Handle: RePEc:nbr:nberwo:7606

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  1. Jean Baldwin Grossman, 1983. "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 359-378.
  2. Orley Ashenfelter & Robert Smith, 1977. "Compliance with the Minimum Wage Law," Working Papers 478, Princeton University, Department of Economics, Industrial Relations Section..
  3. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
  4. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, December.
  5. David Neumark & William Wascher, 2002. "Do Minimum Wages Fight Poverty?," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 315-333, July.
  6. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
  7. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
  8. David Neumark & Mark Schweitzer & William Wascher, 2004. "The effects of minimum wages on the distribution of family incomes: a nonparametric analysis," Working Paper 0412, Federal Reserve Bank of Cleveland.
  9. Charles Brown & Curtis Gilroy & Andrew Kohen, 1983. "Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment and Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 3-31.
  10. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S87-104, August.
  11. David Neumark & DMark Schweitzer & DaWilliam Wascher, 2004. "Minimum Wage Effects throughout the Wage Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
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Cited by:
  1. Ahn, Tom, 2011. "Distributional impacts of a local living wage increase with ability sorting," Economics Letters, Elsevier, vol. 112(3), pages 283-286, September.
  2. Neumark, David & Thompson, Matthew & Brindisi, Francesco & Koyle, Leslie & Reck, Clayton, 2012. "Simulating the Economic Impacts of Living Wage Mandates Using New Public and Administrative Data: Evidence for New York City," IZA Discussion Papers 7113, Institute for the Study of Labor (IZA).
  3. Biglan, Anthony & Cody, Christine, 2013. "Integrating the human sciences to evolve effective policies," Journal of Economic Behavior & Organization, Elsevier, vol. 90(S), pages S152-S162.
  4. David Neumark, 2001. "Living Wages: Protection For or Protection From Low-Wage Workers?," NBER Working Papers 8393, National Bureau of Economic Research, Inc.
  5. Scott Adams & David Neumark, 2004. "The Effects of Living Wage Laws: Evidence From Failed and Derailed Living Wage Campaigns," PPIC Working Papers 2004.12, Public Policy Institute of California.
  6. 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.
  7. Scott Adams & David Neumark, 2004. "The Economic Effects of Living Wage Laws: A Provisional Review," PPIC Working Papers 2004.10, Public Policy Institute of California.
  8. Neumark, David & Thompson, Matthew & Koyle, Leslie, 2012. "The Effects of Living Wage Laws on Low-Wage Workers and Low-Income Families: What Do We Know Now?," IZA Discussion Papers 7114, Institute for the Study of Labor (IZA).
  9. Scott Adams & David Neumark, 2004. "When Do Living Wages Bite?," NBER Working Papers 10561, National Bureau of Economic Research, Inc.
  10. Scott Adams & David Neumark, 2003. "Living Wage Effects: New and Improved Evidence," NBER Working Papers 9702, National Bureau of Economic Research, Inc.
  11. Daniel Fairchild, 2004. "Does the minimum wage help the poor?," Forum for Social Economics, Springer, vol. 34(1), pages 31-42, September.
  12. Mark D. Brenner, 2004. "The Economic Impact of Living Wage Ordinances," Working Papers wp80, Political Economy Research Institute, University of Massachusetts at Amherst.

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