Working Paper: NBER ID: w25240
Authors: Arindrajit Dube
Abstract: There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution. The long run (3 or more years) minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between -0.220 and -0.459 across alternative specifications. The long run minimum wage elasticities for the 10th and 15th unconditional quantiles of family income range between 0.152 and 0.430 depending on specification. A reduction in public assistance partly offsets these income gains, which are on average 66% as large when using an expanded income definition including tax credits and non-cash transfers.
Keywords: Minimum Wage; Family Income; Poverty; Income Distribution
JEL Codes: I32; I38; J2; J38; J58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher minimum wages (J38) | significant increases in family incomes (J12) |
| higher minimum wages (J38) | increases in family incomes at the 10th and 15th quantiles (D31) |
| higher minimum wages (J38) | elasticity of the nonelderly poverty rate (I32) |
| reduction in public assistance (I38) | offsets income gains from higher minimum wages (J38) |