
Contents
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4.1 Introduction 4.1 Introduction
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4.2 Theory 4.2 Theory
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4.3 Effects of Minimum Wages on the Wage Distribution 4.3 Effects of Minimum Wages on the Wage Distribution
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4.3.1 Effects on Low-Wage Workers, and Spikes in the Wage Distribution 4.3.1 Effects on Low-Wage Workers, and Spikes in the Wage Distribution
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4.3.2 Spillovers 4.3.2 Spillovers
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4.3.3 The Contribution of Minimum Wages to Increases in Wage Inequality in the United States 4.3.3 The Contribution of Minimum Wages to Increases in Wage Inequality in the United States
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4.4 Effects of Minimum Wages on Earnings 4.4 Effects of Minimum Wages on Earnings
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4.5 Conclusions 4.5 Conclusions
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4 Minimum Wage Effects on the Distribution of Wages and Earnings
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Published:October 2008
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Abstract
This chapter examines how minimum wage changes affect wages and earnings, first describing how minimum wages affect the wage distribution. The effect of the minimum wage on the distribution of earnings is not as straightforward as its effect on the distribution of wages, and thus the second goal of the chapter is to provide a more complete description of how the minimum wage influences labor income—both for workers directly affected by the minimum wage and for workers who might be indirectly affected via spillover effects. To this end, it presents evidence on how minimum wages affect workers at different points in the wage distribution. This evidence examines a broader set of margins along which workers at different points in the wage distribution may be affected, including wages, employment, hours, and, ultimately, labor income.
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