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Thinking about Local Living Wage Requirements

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Abstract

This paper reviews what we currently know about the benefits and costs of different varieties of a "living wage": a local government requirement, now adopted by over 50 local governments, for wages above the federal minimum imposed on employers with some financial link to the local government. The review includes economic theory, empirical research on local labor markets, and empirical research on the living wage. The paper concludes that moderate living wage requirements applied to the local government's own employees, and contractors' and grantees' employees who are funded by the local government, may do more good than harm. Excessive living wages or living wages applied to non-city funded workers are more likely to have negative side-effects. The merits of living wages applied to economic development assistance depend on the local economy's strength and whether this assistance program is used by the city's competitors. In a weak local economy, living wages applied to commonly-used economic development programs may reduce the city's economic growth.

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  • Timothy J. Bartik, 2002. "Thinking about Local Living Wage Requirements," Upjohn Working Papers 02-76, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:02-76
    Note: A revised version of this paper appears in Urban Affairs Review, Vol. 40, No. 2 (November 2004), pp. 269-299.
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    File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1093&context=up_workingpapers
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    References listed on IDEAS

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    1. 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.
    2. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
    3. Grieson, Ronald E., 1980. "Theoretical analysis and empirical measurements of the effects of the Philadelphia income tax," Journal of Urban Economics, Elsevier, vol. 8(1), pages 123-137, July.
    4. Timothy J. Bartik, 2001. "Jobs for the Poor: Can Labor Demand Policies Help?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number tjb2001.
    5. Susan N. Houseman, 1998. "The Effects of Employer Mandates," Book chapters authored by Upjohn Institute researchers, in: Richard B. Freeman & Peter Gottschalk (ed.),Generating Jobs: How to Increase Demand for Less-Skilled Workers, pages 154-191, W.E. Upjohn Institute for Employment Research.
    6. Lawrence F. Katz & Lawrence H. Summers, 1989. "Industry Rents: Evidence and Implications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1989 Micr), pages 209-290.
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    Cited by:

    1. 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.
    2. Lester, William T., 2009. "The Impact of Living Wage Laws on Urban Economic Development Patterns and the Local Business Climate: Evidence from California Cities," Institute for Research on Labor and Employment, Working Paper Series qt9313w788, Institute of Industrial Relations, UC Berkeley.
    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.

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    More about this item

    Keywords

    living wage; cities; Bartik; Upjohn;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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