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A Living Wage? The Effects of the Minimum Wage on the Distribution of Wages, the Distribution of Family Earnings, and Poverty

Author

Listed:
  • David Card

    (Princeton University)

  • Alan B. Krueger

    (U.S. Department of Labor and Princeton University)

Abstract

This paper analyses the distributional impact of the 1990 and 1991 increases in the federal minimum wage. The rise in the federal minimum wage had very different impacts across states, depending on state-specific minimum wage floors and the overall level of wages in each state. In states with a higher fraction of workers affected by the minimum wage change, we find that the minimum wage hike generated significant increases in the lower percentiles of wages, and significant reductions in wage dispersion. The higher minimum wage also led to increases in the lower percentiles of the family earnings distribution, and a narrowing of the dispersion in family earnings. We find some evidence that the increase in the minimum wage lowered poverty rates for families with some attachment to the labor market.

Suggested Citation

  • David Card & Alan B. Krueger, 1994. "A Living Wage? The Effects of the Minimum Wage on the Distribution of Wages, the Distribution of Family Earnings, and Poverty," Working Papers 712, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:333
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    Citations

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    Cited by:

    1. Oren M. Levin-Waldman, 1996. "Exploring the Politics of the Minimum Wage," Economics Working Paper Archive wp_176, Levy Economics Institute.
    2. Loughrey, Jason & Donnellan, Trevor & Hanrahan, Kevin & Hennessy, Thia, 2013. "Agricultural Labour Market Flexibility in the EU and Candidate Countries," Working papers 155707, Factor Markets, Centre for European Policy Studies.
    3. M Leibbrandt & H Bhorat & I Woolard, 2001. "Household Inequality And The Labor Market In South Africa," Contemporary Economic Policy, Western Economic Association International, vol. 19(1), pages 73-86, January.
    4. Attakrit Leckcivilize, 2015. "Does the minimum wage reduce wage inequality? Evidence from Thailand," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-23, December.

    More about this item

    Keywords

    minimum wage; distribution of income; wage inequality; poverty;
    All these keywords.

    JEL classification:

    • A29 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Other
    • A3 - General Economics and Teaching - - Multisubject Collective Works

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