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Does Raising the Minimum Wage Help the Poor?

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  • ANDREW LEIGH

Abstract

What is the impact of raising the minimum wage on family incomes? Using data from the 1994-1995 to 2002-2003 Survey of Income and Housing, the characteristics of low-wage workers are analysed. Those who earn near-minimum wages are disproportionately female, unmarried and young, without postschool qualifications and overseas born. About one-third of near-minimum-wage workers are the sole worker in their household. Due to low labour force participation rates in the poorest households, minimum-wage workers are most likely to be in middle-income households. Under plausible parameters for the effect of minimum wages on hourly wages and employment, it appears unlikely that raising the minimum wage will significantly lower family income inequality. Copyright © 2007 The Economic Society of Australia.

Suggested Citation

  • Andrew Leigh, 2007. "Does Raising the Minimum Wage Help the Poor?," The Economic Record, The Economic Society of Australia, vol. 83(263), pages 432-445, December.
  • Handle: RePEc:bla:ecorec:v:83:y:2007:i:263:p:432-445
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    Cited by:

    1. Wang‐Sheng Lee & Sandy Suardi, 2011. "Minimum Wages and Employment: Reconsidering the Use of a Time Series Approach as an Evaluation Tool," British Journal of Industrial Relations, London School of Economics, vol. 49(Supplemen), pages 376-401, July.
    2. Joseph J. Sabia, 2008. "Minimum wages and the economic well-being of single mothers," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(4), pages 848-866.
    3. Alexandros Karakitsios & Manos Matsaganis, 2018. "Minimum Wage Effects on Poverty and Inequality," DEOS Working Papers 1801, Athens University of Economics and Business.
    4. Roger Wilkins & Mark Wooden, 2011. "Measuring Minimum Award Wage Reliance in Australia: The HILDA Survey Experience," Melbourne Institute Working Paper Series wp2011n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. repec:spr:jlabre:v:38:y:2017:i:3:d:10.1007_s12122-017-9241-z is not listed on IDEAS
    6. repec:bla:ecorec:v:92:y:2016:i:299:p:517-547 is not listed on IDEAS
    7. Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's 'Great Leap Forward'?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, June.
    8. James Bishop, 2018. "The Effect of Minimum Wage Increases on Wages, Hours Worked and Job Loss," RBA Research Discussion Papers rdp2018-06, Reserve Bank of Australia.
    9. Michele Campolieti & Morley Gunderson & Byron Lee, 2012. "The (Non) Impact of Minimum Wages on Poverty: Regression and Simulation Evidence for Canada," Journal of Labor Research, Springer, vol. 33(3), pages 287-302, September.
    10. repec:ilo:ilowps:462988 is not listed on IDEAS
    11. Kapelyuk Sergey, 2014. "Impact of minimum wage on income distribution and poverty in Russia," EERC Working Paper Series 14/03e, EERC Research Network, Russia and CIS.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • 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
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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