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Living Wage Effects: New and Improved Evidence

Author

Listed:
  • Scott Adams

    (University of Wisconsin-Milwaukee)

  • David Neumark

    (Public Policy Institute of California and the National Bureau of Economic Research)

Abstract

This article explores the effects of living wages on low-wage workers and low-income families. First, earlier analyses are updated using data for 1996 through 2002, and a number of criticisms of those analyses are addressed. This article confirms earlier findings that business-assistance living wage laws boost wages of the lowest wage workers at the cost of some disemployment, ultimately reducing net urban poverty. Second, this article expands the analysis of distributional effects beyond the poverty threshold. It was not found that living wage laws increase the depth of poverty among families that remain poor; on the other hand, families somewhat below and somewhat above the poverty line are helped. Finally, this article suggests that the poverty reductions generated by living wages may stem from income gains for individuals with higher wages or skills who are nonetheless in poor families rather than for individuals with the lowest wages or skills.

Suggested Citation

  • Scott Adams & David Neumark, 2005. "Living Wage Effects: New and Improved Evidence," Economic Development Quarterly, , vol. 19(1), pages 80-102, February.
  • Handle: RePEc:sae:ecdequ:v:19:y:2005:i:1:p:80-102
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    References listed on IDEAS

    as
    1. David Neumark & William Wascher, 2002. "Do Minimum Wages Fight Poverty?," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 315-333, July.
    2. David Neumark & Scott Adams, 2003. "Do Living Wage Ordinances Reduce Urban Poverty?," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
    3. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
    4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    5. Golan, Amos & Perloff, Jeffrey M. & Wu, Ximing, 2001. "Welfare Effects of Minimum Wage and Other Government Policies," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0gb7h58q, Department of Agricultural & Resource Economics, UC Berkeley.
    6. David Neumark, 2004. "Living Wages: Protection for or Protection from Low-Wage Workers?," ILR Review, Cornell University, ILR School, vol. 58(1), pages 27-51, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Adams, Scott & Neumark, David, 2005. "The effects of living wage laws: Evidence from failed and derailed living wage campaigns," Journal of Urban Economics, Elsevier, vol. 58(2), pages 177-202, September.
    2. David Neumark & Matthew Thompson & Leslie Koyle, 2012. "The effects of living wage laws on low-wage workers and low-income families: What do we know now?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-34, December.
    3. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    4. Iulia Siedschlag, 2008. "Macroeconomic Differentials and Adjustment in the Euro Area," SUERF Studies, SUERF - The European Money and Finance Forum, number 2008/3 edited by Morten Balling.
    5. David Neumark, 2009. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity," NBER Working Papers 14807, National Bureau of Economic Research, Inc.
    6. 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 of Labor Economics (IZA).
    7. Andrea Werner & Ming Lim, 2016. "The Ethics of the Living Wage: A Review and Research Agenda," Journal of Business Ethics, Springer, vol. 137(3), pages 433-447, September.
    8. repec:spr:izalpo:v:6:y:2017:i:1:d:10.1186_s40173-017-0083-3 is not listed on IDEAS
    9. Scott Adams & David Neumark, 2004. "When Do Living Wages Bite?," PPIC Working Papers 2004.09, Public Policy Institute of California.
    10. James Buss & Arthur Romeo, 2006. "The changing employment situation in some cities with living wage ordinances," Review of Social Economy, Taylor & Francis Journals, vol. 64(3), pages 349-367.
    11. Jared Bernstein, 2004. "The Living Wage Movement. What Is It, Why Is It, and What's Known about Its Impact?," NBER Chapters,in: Emerging Labor Market Institutions for the Twenty-First Century, pages 99-140 National Bureau of Economic Research, Inc.
    12. Barrett, Alan & Bergin, Adele & FitzGerald, John & Traistaru-Siedschlag, Iulia, 2006. "Economic Assessment of the Euro Area: Forecasts and Policy Analysis, Autumn Report 2006," Research Series, Economic and Social Research Institute (ESRI), number sustat22.
    13. Wang, Xianghong, 2012. "When workers do not know – The behavioral effects of minimum wage laws revisited," Journal of Economic Psychology, Elsevier, vol. 33(5), pages 951-962.
    14. Ahn, Tom, 2011. "Distributional impacts of a local living wage increase with ability sorting," Economics Letters, Elsevier, vol. 112(3), pages 283-286, September.
    15. Holzer, Harry J., 2008. "Living Wage Laws: How Much Do (Can) They Matter?," IZA Discussion Papers 3781, Institute of Labor Economics (IZA).
    16. Jellal, Mohamed, 2012. "Maroc salaire minimum emploi et pauvreté
      [Morocco minimum wage employment and poverty]
      ," MPRA Paper 38491, University Library of Munich, Germany.
    17. Suzanne Clain, 2008. "How Living Wage Legislation Affects U.S. Poverty Rates," Journal of Labor Research, Springer, vol. 29(3), pages 205-218, September.

    More about this item

    Keywords

    living wages; wages; employment; poverty;

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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