Do Minimum Wages Fight Poverty?


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    We thank Rebecca Blank, Harry Holzer, Sanders Korenman, Walter Oi, and Dan Sichel for helpful comments. The views expressed are those of the authors only and do not necessarily reflect those of the Federal Reserve Borrd or its staff.


We present evidence on the effects of minimum wages on family incomes. The results indicate that minimum wages increase both the probability that poor families escape poverty and the probability that previously nonpoor families fall into poverty. The estimated increase in the flow into poverty is larger, although this difference is not statistically significant. We also find that minimum wages tend to boost the incomes of poor families that remain below the poverty line. On net, the various trade-offs created by minimum wage increases more closely resemble income redistribution among low-income families than income redistribution from high- to low-income families.