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Review of Economics of the Household

, Volume 13, Issue 1, pp 95–134 | Cite as

Minimum wages, poverty, and material hardship: new evidence from the SIPP

  • Joseph J. Sabia
  • Robert B. Nielsen
Article

Abstract

While a number of policymakers have argued that raising the minimum wage will reduce material hardship, empirical evidence to support or refute this claim is scant. Using data drawn from the Survey of Income and Program Participation, we examine the effect of minimum wage increases on poverty, material hardship, and government program participation. Difference-in-difference estimates provide little evidence that state and federal minimum wage increases between 1996 and 2007 reduced poverty, material hardship, or receipt of public program benefits among all individuals, workers, younger individuals without high school degrees, or younger black individuals. Our findings are robust across several measures of hardship, including poverty, financial hardship, housing stress, food insecurity, durable goods deprivation, and health insecurity. We find some evidence of modest redistribution effects of the minimum wage among low-skilled individuals.

Keywords

Minimum wage Material hardship Poverty 

JEL Classification

J38 I32 I38 

Notes

Acknowledgments

The authors thank Al Gottschalck, Carolyn Hronis, and Sharon O’Donnell for providing valuable information about constructing our files. Thanks also to Michael Saltsman and an EPI reviewer for useful comments and suggestions on an earlier draft of this paper and to Alex Chesney, Andrew Barone, and Melissa Wilmarth for editorial assistance. This research was funded, in part, by the Employment Policies Institute. Work on an earlier draft of this paper was completed when Sabia was an assistant professor at the United States Military Academy. Any errors that appear are the authors.

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of EconomicsSan Diego State UniversitySan DiegoUSA
  2. 2.Department of Housing and Consumer EconomicsUniversity of GeorgiaAthensUSA

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