The Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data

Presentation | October 10 | 4-6 p.m. | 2521 Channing Way (Inst. for Res. on Labor & Employment), IRLE Director’s Room

 John Voorheis, U.S. Census Bureau

 Institute of Research on Labor & Employment

John Voorheis will discuss the implications of his research finding that minimum wage policies increase long-term earnings of low-wage workers, and possibly reasons for the persistence of those effects. Rising income inequality and stagnating economic mobility have prompted state and local governments to focus on higher minimum wages. As these policies expand, an understanding of how minimum wage increases affect earnings growth is critical. However, commonly used public datasets offer limited opportunities to evaluate this relationship. Using administrative earnings data from the Social Security Administration linked to the Current Population Survey, we gain valuable insight into how effects of the minimum wage on earnings persist over time.

By estimating the effects of the minimum wage on both growth incidence curves and income mobility profiles, we find that raising the minimum wage increases earnings growth at the bottom of the distribution. These effects persist – even grow in magnitude over several years. These findings suggest that a minimum wage increase comparable in magnitude to the increase experienced in Seattle between 2013 and 2016 would have blunted some, but not all, of the worst income losses suffered at the bottom of the income distribution during the Great Recession.

 christina.mckay@berkeley.edu, 510-643-8140