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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
    DOI: 10.1177/0891242404268639
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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. 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.
    3. David Neumark & Mark Schweitzer & William Wascher, 2005. "The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 867-894.
    4. 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.
    5. Robert Pollin & Jeannette Wicks-Lim & Mark D. Brenner, 2002. "Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark's How Living Wage Laws Affect Low-Wage Workers and Low-Income Families," Working Papers wp43, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    7. David Neumark & Scott Adams, 2003. "Do Living Wage Ordinances Reduce Urban Poverty?," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
    8. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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, May.
    4. 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.
    5. Brian Fabo & Sharon Sarah Belli, 2017. "(Un)beliveable wages? An analysis of minimum wage policies in Europe from a living wage perspective," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-11, December.
    6. Scott Adams & David Neumark, 2004. "When Do Living Wages Bite?," PPIC Working Papers 2004.09, Public Policy Institute of California.
    7. Janmaat, Johannus & Harris, Lindsay & Carlaw, Kenneth & Evans, Mike, 2019. "Action economics? working with citizen groups in Revelstoke, BC to evaluate the impact of a living wage," MPRA Paper 96740, University Library of Munich, Germany.
    8. 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, National Bureau of Economic Research, Inc.
    9. 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.
    10. Ahn, Tom, 2011. "Distributional impacts of a local living wage increase with ability sorting," Economics Letters, Elsevier, vol. 112(3), pages 283-286, September.
    11. Holzer, Harry J., 2008. "Living Wage Laws: How Much Do (Can) They Matter?," IZA Discussion Papers 3781, Institute of Labor Economics (IZA).
    12. Jose Fernandez & Thomas Holman & John V. Pepper, 2014. "The Impact of Living-Wage Ordinances on Urban Crime," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 478-500, July.
    13. Jellal, Mohamed, 2012. "Maroc salaire minimum emploi et pauvreté [Morocco minimum wage employment and poverty]," MPRA Paper 38491, University Library of Munich, Germany.
    14. David Reynolds & Jean Vortkamp, 2005. "The Effect of Detroit’s Living Wage Law on Nonprofit Organizations," Economic Development Quarterly, , vol. 19(1), pages 45-61, February.
    15. 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.
    16. 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).
    17. David Neumark & Matthew Thompson & Francesco Brindisi & Leslie Koyle & Clayton Reck, 2013. "Simulating the Economic Impacts of Living Wage Mandates Using New Public and Administrative Data," Economic Development Quarterly, , vol. 27(4), pages 271-283, November.
    18. 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.
    19. 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, June.
    20. 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.
    21. DUTCAS, Monica Florica, 2019. "Universal Basic Income, Possible Economic Policy Instrument Regarding Labour Market," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 7(1), pages 42-51, October.
    22. Suzanne Clain, 2008. "How Living Wage Legislation Affects U.S. Poverty Rates," Journal of Labor Research, Springer, vol. 29(3), pages 205-218, September.

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    More about this item

    Keywords

    living wages; wages; employment; poverty;
    All these keywords.

    JEL classification:

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

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