Welfare Reform on the Web (June 2005): Minimum Wage - Overseas

Does the minimum wage affect welfare caseloads?

M.E. Page, J. Spetz and J. Millar

Journal of Policy Analysis and Management, vol.24, 2005, p.273-295

Article tests the hypothesis that the US federal minimum wage reduces demand for workers with limited skills and so increases the numbers of women who participate in welfare programmes. Analysis suggests that a 35% minimum wage hike, like that recently implemented in California, could lead to a 3-7% increase in welfare caseloads. Authors conclude that, although minimum wages may increase the financial independence of some low-skilled single mothers, the gains are counterbalanced by a net increase in welfare expenditure.