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Do Minimum Wages Fight Poverty?

Author

Listed:
  • David Neumark

    (Department of Economics, Michigan State University, East Lansing, MI 48824.)

  • William Wascher

    (Board of Governors of the Federal Reserve System, 20th and Constitution NW, Washington, DC 20551.)

Abstract

We present evidence on the effects of minimum wages on family incomes. The results indicate that minimum wages increase both the probability that poor families escape poverty and the probability that previously nonpoor families fall into poverty. The estimated increase in the flow into poverty is larger, although this difference is not statistically significant. We also find that minimum wages tend to boost the incomes of poor families that remain below the poverty line. On net, the various trade-offs created by minimum wage increases more closely resemble income redistribution among low-income families than income redistribution from high- to low-income families. Copyright 2002, Oxford University Press.

Suggested Citation

  • David Neumark & William Wascher, 2002. "Do Minimum Wages Fight Poverty?," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 315-333, July.
    • Handle: RePEc:oup:ecinqu:v:40:y:2002:i:3:p:315-333
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    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • K3 - Law and Economics - - Other Substantive Areas of Law

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