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The Economic Effects of Living Wage Laws: A Provisional Review

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  • 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.

Suggested Citation

  • Scott Adams & David Neumark, 2004. "The Economic Effects of Living Wage Laws: A Provisional Review," NBER Working Papers 10562, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10562
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    1. David Neumark & Mark Schweitzer & William Wascher, 2005. "The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 867-894.
    2. David Neumark, 2004. "Living Wages: Protection for or Protection from Low-Wage Workers?," ILR Review, Cornell University, ILR School, vol. 58(1), pages 27-51, October.
    3. Timothy J. Bartik, 2002. "Thinking about Local Living Wage Requirements," Upjohn Working Papers 02-76, W.E. Upjohn Institute for Employment Research.
    4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    5. David Neumark & Scott Adams, 2003. "Do Living Wage Ordinances Reduce Urban Poverty?," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
    6. Reich, Michael & Hall, Peter & Jacobs, Ken, 2003. "Living Wage Policies at San Francisco Airport:: Impacts on Workers and Businesses," Institute for Research on Labor and Employment, Working Paper Series qt8km9s5m7, Institute of Industrial Relations, UC Berkeley.
    7. Robert Pollin & Jeannette Wicks-Lim & Mark D. Brenner, 2002. "Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark's How Living Wage Laws Affect Low-Wage Workers and Low-Income Families," Working Papers wp43, Political Economy Research Institute, University of Massachusetts at Amherst.
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    Cited by:

    1. Mastracci, Sharon H. & Persky, Joseph J., 2008. "Effects of state minimum wage increases on employment, hours, and earnings of low-wage workers in Illinois," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 38(3), pages 1-11.
    2. Paul OSTERMAN, 2008. "Improving the quality of low-wage work: The current American experience," International Labour Review, International Labour Organization, vol. 147(2-3), pages 115-134, June.
    3. David Neumark, 2009. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity," NBER Working Papers 14807, National Bureau of Economic Research, Inc.
    4. James Buss & Arthur Romeo, 2006. "The changing employment situation in some cities with living wage ordinances," Review of Social Economy, Taylor & Francis Journals, vol. 64(3), pages 349-367.

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    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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