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The Impact of the Minimum Wage on Other Wages


  • Jean Baldwin Grossman


In this paper I explore how changes in the minimum wage affect various occupational wages. I postulate that other wages increase for two reasons: first, firms try to mitigate the deterioration in a worker's relative wage which would cause him to reduce his work effort, and second, there is an increase in the demand for nonminimum wage workers. Wage adjustment patterns are examined to ascertain whether wage comparisons play a role in the adjustment process. The empirical work shows a short-run wage compression among white-collar occupations which is consistent with the wage comparison model. However, large standard errors make inferences weak.

Suggested Citation

  • Jean Baldwin Grossman, 1983. "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 359-378.
  • Handle: RePEc:uwp:jhriss:v:18:y:1983:i:3:p:359-378

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    References listed on IDEAS

    1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security in America: Lessons from Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number kagsnh1993, November.
    2. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
    3. Behrman, Jere & Tarbman, Paul, 1985. "Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker's Intergenerational Endowments Model," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 144-151, February.
    4. Peters, H Elizabeth, 1992. "Patterns of Intergenerational Mobility in Income and Earnings," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 456-466, August.
    5. Joseph G. Altonji & Thomas A. Dunn, 2000. "An Intergenerational Model of Wages, Hours, and Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 221-258.
    6. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
    7. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-429, June.
    8. Solon, Gary, 1989. "Biases in the Estimation of Intergenerational Earnings Correlations," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 172-174, February.
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