Working Paper: NBER ID: w10562
Authors: Scott Adams; David Neumark
Abstract: Nearly 100 cities and local governments in the United States passed living wage laws since the mid-1990s. The central goal of living wages is to reduce poverty, yet they may fail to do so because of disemployment effects. We summarize and critique the existing research on the effects of living wages on wages, employment, and family income, emphasizing common findings, points of disagreement, and important questions for future research. The evidence thus far points to wage increases as well as employment losses for the least-skilled although there is disagreement about the employment effects but on net some beneficial distributional effects. The evidence also points to efficiency wage-type effects of living wage laws that may offset some of the adverse impacts on employers.
Keywords: Living Wage; Employment; Poverty; Economic Policy
JEL Codes: J2; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Living wage laws (J38) | wage increases for low-wage workers (J38) |
| Business assistance living wage laws (J38) | wage increases for low-wage workers (J38) |
| Living wage laws (J38) | disemployment effect (J65) |
| Living wage laws (J38) | reduction in employment for those in the bottom tenth of the wage distribution (F66) |
| Business assistance living wage laws (J38) | reduction in poverty rate (I32) |
| Living wage laws (J38) | no significant effects on the depth of poverty (I32) |
| Living wage laws (J38) | no significant effects on the probability of families being below various income thresholds (D19) |