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Raising Lower-Level Wages: When and Why It Makes Economic Sense

Author

Listed:
  • Tomas Hellebrandt

    (Peterson Institute for International Economics)

  • Michael Jarand

    (Peterson Institute for International Economics)

  • Jacob Funk Kirkegaard

    (Peterson Institute for International Economics)

  • Tyler Moran

    (Peterson Institute for International Economics)

  • Adam S. Posen

    (Peterson Institute for International Economics)

  • Justin Wolfers

    (Peterson Institute for International Economics)

  • Jan Zilinsky

    (Peterson Institute for International Economics)

Abstract

As the United States emerges from the Great Recession, concern is rising over the issues of income inequality, stagnation of wages, and especially the struggles of lower-skilled workers at the bottom end of the wage scale. A number of major American employers—for example, Aetna and Walmart—have begun to voluntarily raise the pay of their own lowest-paid employees. In this collection of essays, economists from the Peterson Institute for International Economics analyze the potential benefits and costs of widespread wage increases for lower-skilled workers, if adopted by a relevant share of US private employers. The PIIE fellows conclude that raising the pay of many of the lowest-paid US private-sector workers would not only reduce income inequality but also boost overall productivity growth, with likely minimal effect on employment in the current financial context.

Suggested Citation

  • Tomas Hellebrandt & Michael Jarand & Jacob Funk Kirkegaard & Tyler Moran & Adam S. Posen & Justin Wolfers & Jan Zilinsky, . "Raising Lower-Level Wages: When and Why It Makes Economic Sense," PIIE Briefings, Peterson Institute for International Economics, number PIIEB15-2, October.
  • Handle: RePEc:iie:piiebs:piieb15-2
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    References listed on IDEAS

    as
    1. Jaejoon Woo & Ms. Elva Bova & Mr. Tidiane Kinda & Ms. Yuanyan S Zhang, 2013. "Distributional Consequences of Fiscal Consolidation and the Role of Fiscal Policy: What Do the Data Say?," IMF Working Papers 2013/195, International Monetary Fund.
    2. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
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