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Welfare Reform on the Web (October 2002): Minimum Wage - Overseas

DO MINIMUM WAGES FIGHT POVERTY?

D. Neumark and W. Wascher

Economic Inquiry, vol. 40, 2002, p. 315-333

Finds that minimum wages in the USA increase both the probability of poor families escaping poverty and the probability of previously non-poor families falling into poverty. The estimated increase in the flow into poverty is larger, but the difference is not statistically significant. Minimum wages also tend to boost the incomes of poor families that remain below the poverty line. The various trade-offs created by minimum wage increases more closely resemble income redistribution among low-income families than income distribution from high- to low-income families.

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