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Interpreting Minimum Wage Effects on Wage Distributions : A Cautionary Tale

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  • Christopher J. Flinn

Abstract

We develop a behavioral model that can be utilized with wage data collected before and after a change in the statutory minium wage to determine whether the change was welfare-improving or not. The tests we develop are nonparametric and are implemented using bootstrap methods. We present some empirical evidence that the 1997 minimum wage change from $4,75 to $5,15 in the U.S. increased welfare in the population of youths aged 16-24 but that the 1996 change from $4,25 to $4,75 did not.

Suggested Citation

  • Christopher J. Flinn, 2002. "Interpreting Minimum Wage Effects on Wage Distributions : A Cautionary Tale," Annals of Economics and Statistics, GENES, issue 67-68, pages 309-355.
    • Handle: RePEc:adr:anecst:y:2002:i:67-68:p:309-355
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    File URL: http://www.jstor.org/stable/20076351
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    Cited by:

    1. Flabbi, Luca, 2010. "Prejudice and gender differentials in the US labor market in the last twenty years," Journal of Econometrics, Elsevier, vol. 156(1), pages 190-200, May.
    2. Mueller, Kai-Uwe & Steiner, Viktor, 2013. "Behavioral effects of a federal minimum wage and income inequality in Germany," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79784, Verein für Socialpolitik / German Economic Association.
    3. Doruk Cengiz & Arindrajit Dube & Attila Lindner & David Zentler-Munro, 2022. "Seeing beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 203-247.
    4. Flinn, Christopher, 2003. "Minimum Wage Effects on Labor Market Outcomes under Search with Bargaining," IZA Discussion Papers 949, Institute of Labor Economics (IZA).
    5. Panagiotis Nanos, 2023. "Minimum wage spillover effects and social welfare in a model of stochastic job matching," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(4), pages 753-802, August.
    6. Malul Miki & Luski Israel, 2009. "The Optimal Policy Combination of the Minimum Wage and the Earned Income Tax Credit," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-24, November.
    7. James Mabli & Christopher Flinn, 2007. "On-the-Job Search, Minimum Wages, and Labor Market Outcomes in an Equilibrium Bargaining Framework," 2007 Meeting Papers 791, Society for Economic Dynamics.
    8. Eckstein, Zvi & Ge, Suqin & Petrongolo, Barbara, 2006. "Job and wage mobility in a search model with non-compliance (exemptions) with the minimum wage," LSE Research Online Documents on Economics 4961, London School of Economics and Political Science, LSE Library.

    More about this item

    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
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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