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Title: Ineffective Policies: Examining the Lack of Impact of State Minimum Wage Changes on Poverty
Citation Type: Miscellaneous
Publication Year: 2023
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Abstract: This paper seeks to investigate the causal effects of changes in state minimum wage on the likelihood of an individual being beneath the poverty threshold. This paper contributes to existing research by exploring the impact of minimum wage at a state level on poverty through a narrower scope. By comparing the outcomes of all industries with industries that have the largest ratios of minimum wage workers, we are able to see the impact in both a broad and targeted context. Our investigation into the relationship between the probability of being below the poverty threshold and key regressors — real state minimum wage, state fixed effects, year fixed effects, and industry fixed effects — employs causal methods, specifically a fixed effects regression model and logistic model. We leveraged data from the American Community Survey and Federal Reserve Economic Data from 2012 through 2019, and through our analysis, the results indicate that real minimum wage does not have a large nor significant impact on the probability of an individual being below the poverty threshold across the industries included in the dataset. The findings indicate that the minimum wage is ineffective as the only policy tool to combat poverty.
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Authors: Bhora, Mahek; Le, Kristen
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Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure, Poverty and Welfare, Work, Family, and Time
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