The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis
The primary goal of a national minimum wage floor is to raise the incomes of poor families with members in the work force. We present evidence on the effects of minimum wages on family incomes from March CPS surveys. Using non-parametric estimates of the distributions of family income relative to needs in states and years with and without minimum wage increases, we examine the effects of minimum wages on this distribution, and on the distribution of the changes in income that families experience. Although minimum wages do increase the incomes of some poor families, the evidence indicates that their net effect is, if anything, to increase the proportions of families with incomes below or near the poverty line. Thus, it would appear that reductions in the proportions of families that are poor or near-poor should not be counted among the potential benefits of minimum wages.
JEL Classification: J18, I3, J23, D31
Key Words: minimum wages, poverty, nonparametric, family incomes
Suggested citation: Neumark, David, Mark Schweitzer, and William Wascher, 2004. "The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis," Federal Reserve Bank of Cleveland, Working Paper no. 04-12.