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The Minimum Wage and Inequality Between Groups

Author

Listed:
  • Francine D. Blau
  • Isaac Cohen
  • Matthew Comey
  • Lawrence Kahn
  • Nikolai Boboshko

Abstract

Using 1979-2019 Current Population Survey data, we study the effect of state and federal minimum wage policies on gender, race, and ethnic inequality. We find that minimum wages substantially reduce intergroup wage inequality at least up to the 20th wage percentile, with no evidence of adverse employment effects. We conduct counterfactual simulations of between-group inequality due to minimum wage changes since 1979. Declines in the real minimum wage in the 1980s slowed progress in narrowing between-group inequality. Relatively small changes in minimum wages during 1989-1998 and 1998-2007 meant little role for the minimum wage over those time spans. Since 2007, several states have steeply raised their minimum wages, especially raising Hispanics’ relative wages, because they earn low wages and reside disproportionately in those states. Finally, we find that raising the federal minimum wage to $12/hour in 2020 dollars ($14.49 in 2025Q2 dollars) would reduce existing between-group wage gaps below the 15th percentile by 25-50%.

Suggested Citation

  • Francine D. Blau & Isaac Cohen & Matthew Comey & Lawrence Kahn & Nikolai Boboshko, 2025. "The Minimum Wage and Inequality Between Groups," CESifo Working Paper Series 12371, CESifo.
    • Handle: RePEc:ces:ceswps:_12371
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    References listed on IDEAS

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    1. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    2. Jeffrey Clemens, 2021. "How Do Firms Respond to Minimum Wage Increases? Understanding the Relevance of Non-employment Margins," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 51-72, Winter.
    3. Blau, Francine D & Kahn, Lawrence M, 1997. "Swimming Upstream: Trends in the Gender Wage Differential in 1980s," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 1-42, January.
    4. Jeffrey Clemens & Lisa B. Kahn & Jonathan Meer, 2018. "The Minimum Wage, Fringe Benefits, and Worker Welfare," NBER Working Papers 24635, National Bureau of Economic Research, Inc.
    5. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
    6. Nicole M. Fortin & Thomas Lemieux & Neil Lloyd, 2021. "Labor Market Institutions and the Distribution of Wages: The Role of Spillover Effects," Journal of Labor Economics, University of Chicago Press, vol. 39(S2), pages 369-412.
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    12. Francine D. Blau & Lawrence M. Kahn & Nikolai Boboshko & Matthew Comey, 2024. "The Impact of Selection into the Labor Force on the Gender Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 42(4), pages 1093-1133.
    13. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
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    Keywords

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    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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