Wednesday, December 30, 2015

Minimum wage and poverty reduction

Raising the legal minimum wage involves tradeoffs, but my reading of the evidence and analysis is that there will be more gains than losses for low-income workers and their families under most of the proposed increases. The logic of setting different state and local minimums is nicely argued by Arindrajit Dube here. Still, it's worth remembering that raising the minimum wage is not a very well-targeted policy for poverty reduction, compared with, say, increased generosity of the Earned Income Tax Credit (EITC). David Neumark makes the point here. As he notes, the two policies can be complementary, so progressives should push for more on both fronts.

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